At a recent HCM City seminar discussing the real estate market’s potential, authorities identified some of the biggest contributors to the loss of trust among consumers and investors. These include a high inventory level representing great value, incomplete construction plaguing many projects, and the slow progress in compensation and site clearance.
Le Hoang Chau, President of the Ho Chi Minh City Real Estate Association, said that with the current difficult economic context, the real estate market would not be able to address all its issues by 2013.
There are currently 10,000 apartments, 1,000 houses and 19,000 sq.m of office space still unsold in Ho Chi Minh City alone, Chau said. The real estate market’s problems have a domino effect on other sectors, such as building material production and interior decoration, and cause unemployment.
Economist Dinh The Hien said the sector is now enduring its hardest times in 15 years. Despite the sharp decrease in the prices of houses and apartments their liquidity remains at low levels.
The total sales of real estate businesses listed on stock exchanges fell 20–25 percent compared to the same period last year, Hien said. Their profits also fell by 35–40 percent.
Hien believes the diminishing trust consumers place in the quality of houses and apartments is one of the main reasons for the low liquidity, noting that many “high-quality” residential projects are only providing adequate services.
Once the legitimate rights of consumers are violated or disrespected, they will no longer accept the products in question, especially when the market is confronted by various challenges.
The overabundance of houses and apartments will continue as many projects are nearing completion, Hien said.
He said the market will stabilise by 2014.
Nguyen Manh Ha, Director General of the House Management Department under the Ministry of Construction, said that though various responses have been proposed, none can solve the problems of the sector overnight.
He recommended measures to maintain a balance in supply and demand and assist consumers.
Ha said the Ministry of Construction has submitted a proposal to the government on establishing a house saving fund. Its implementation is expected in Hanoi and Ho Chi Minh City very soon.
In addition, Ha said, the ministry will intensify the inspection of construction projects, halt those deemed unfeasible, and redesign already completed apartments to more accurately meet consumer demands.
(VOV)
