While applauding the second stimulus package which has helped make the stock market prosper, real estate developers believe that the package is not big enough to warm up the real estate market.
“The extended short term interest rate subsidy program will not have a big impact on the real estate market,” stated General Director of Dat Xanh Real Estate Company Luong Tri Thin. He noted that the program will only extend to the second quarter of 2010, while the interest rate subsidy will be two instead of four percent.
Thin went on to explain that banks are limiting loans to fund real estate purchases. Meanwhile, people are also reluctant to pour money into real estate, especially when the stock market promises big profits. Both these factors have left the real estate market thirsty for capital.
Dr Le Tham Duong from the HCM City Banking University confirmed that unclear regulations on personal income taxes (PIT) on real estate assignment have made real estate less attractive in the eyes of investors in comparison with the stock market and other investment channels.
Both Thin and Duong believe that the second demand stimulus package is not powerful enough to provide enough capital to shore up the real estate market.
In addition, the real estate market also needs to solve many other problems.
Marc Townsend, Managing Director of CBRE Vietnam, a real estate consultancy firm, said that things would improve only in the second half of 2010 and early 2011, when both Vietnam’s and the world’s economies show stable recovery signs and tax policies become clearer.
Pham Van Hai, General Director of ACB Real Estate, said that the market of reasonably priced apartments will be stable thanks to high demand. E-Home 2, Tecco and Le Thanh apartments, for example, have been selling very well.
Deputy Minister of Construction Nguyen Tran Nam admitted that the demand for housing is really very high, especially the demand for houses with moderate space and prices.
According to Nguyen Phuoc Duc, Deputy General Director of Dat Lanh Real Estate Company, the majority of people cannot afford the current prices of 15-20 million dong per square meter. Meanwhile, speculators are keeping “wait-and-see” attitude and thus very few transactions are being made right now.
He explained that if the market offered small apartments and houses with areas of 30 square meters and prices of 12.5 million dong per square meter (375 million dong per home), and if banks lend 70 percent of apartments’ values to the buyers, then the market will become very busy.
According to Savills Vietnam, a real estate consultancy firm, there is a shortage in supply in all market segments in Hanoi, while the supply is more profuse in HCM City.
Some 10,000 apartments will be sold in the period between the fourth quarter of 2009 and 2012. In the fourth quarter of 2009 alone, the primary market will have a supply of 2,000 apartments.