VNRE - The prices of homes and apartments in Vietnam are out of control and have skyrocketed beyond the reach of most buyers, says Vietnam Construction Materials Association chairman Tran Van Huynh, who has warned that the current bubble could threaten the economy.
"As the cost of housing has increased, both low- and middle-income families are unable to buy their own home," said former deputy minister of construction Tong Van Nga.
"Meanwhile, speculators have bought dozens of homes and apartments in order to resell them at higher prices, causing real estate prices to continue to increase."
In a time of tight credit and high interest rates, "too much money has been poured into the real estate market," agreed Huynh.
Outstanding mortgage loans from commercial banks totalled VND228 trillion (US$11.7 billion) as of October 31, an increase of 23.5 per cent compared to the same time last year, the State Bank of Vietnam announced yesterday.
At the Vietnam Business Forum held by the Vietnam Chamber of Commerce and Industry and the World Bank at the beginning of the month, Luong Van Ly, a representative of the forum's land task force, suggested planning for each real estate development project should be more transparent in order to cut speculation.
Compensation paid for site clearance also needed to better approach market prices in order to enable families to afford new housing.
Nga proposed a more reasonable appraisal system and the construction of more low-and middle-income housing.
"Developers need to pay heeds to building homes at prices of VND600 million ($30,000) to VND1 billion ($50,000) for middle-and low-income households, as well as apartments for workers in industrial and processing zones," Nga said, also urging the construction of more rental housing.
Deputy Minister of Construction Nguyen Tran Nam suggested the establishment of a housing fund that requires all employees with or without their own homes to contribute 2 per cent of their monthly income to the fund, with contributions to be refunded when they retire.
"The fund would be used to finance loans for medium- and low-income families to purchase their own homes at low interest rates," Nam said.
Former deputy minister of natural resources and environment Dang Hung Vo also urged authorities to introduce a reasonable and equitable system of land-use fees which would encourage investors to put more capital into production rather than in real estate projects.