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Real estate market heats up as prices fall   2009-05-17 - VNS

A soft property market in Ha Noi (pictured) and HCM City has seen a surge in sales recently amid a growing demand from buyers.

The soft-price property market in Ha Noi and HCM City has been heating up lately, with increasingly successful trading and growing demand among buyers.

"The residential market is improving because a large volume of mid-income people have found current prices much lower than the overheated prices from 2006-07," said Pham Si Liem, vice chairman of Viet Nam Federation of Civil Engineering Associations.

"Everyone is trying to manage the credit to buy a piece of land or a house. They are worried about not be able to own if the market overheats again."

"A drop in construction costs coupled with bank promotions for home loans and plentiful supply are excellent conditions for mid-income buyers to join the market," said Sacomreal’s Deputy General Director Bui Tien Thang.

Mid-range property trading in the West and North of Ha Noi has seen remarkable increases, according to the Thinh Vuong Real Estate Centre.

Very reasonable

The price of land on Nguyen Van Cu or Ngoc Lam streets, Long Bien District, ranges from VND16-22 million (US$899-1,237) per sq.m. Villages nearby offer even better prices at VND11-14 million ($618-787) per sq.m.

Nguyen Thuy Hang, who was looking to buy land in Tu Dinh, Long Bien District, found prices very reasonable and pointed out the area’s potential due to ongoing infrastructure projects.

"Over the next few years, those same pieces of land will be expensive," Hang said.

In contrast to the West and North of the capital, the property market in the centre of the city has seen quiet weeks of trading.

Activity has mostly been around well-located houses or apartments in lanes worth VND700-800 million ($39,361-44,984). Buying or selling has been rare in houses worth VND1.5-2 billion ($84,345-112,460).

CB Richard Ellis last month reported that the capital city’s real estate market saw many positive signals in the first quarter, including falling construction costs and a better outlook for supply through 2010.

In HCM City, land prices are falling from the highs they experienced in 2008, but like the Ha Noi market, only mid-range real estate is in demand.

The latest example is the Vo Dinh apartment project in District 12. Each apartment costs about VND9.5-12.5 million ($534-702) per sq.m. Ninety per cent of flatss sold in seven days.

CBRE said that Ha Noi’s residential sales market has not seen the same level of growth as HCM City over the past two to three years, so CBRE did not expect to see as drastic a collapse in sale prices as in HCM City.has suffered.

No warming up

In its first quarter report, CBRE also said that the high-end property market would not warm up this year.

Deputy Minister of Construction Nguyen Tran Nam said high-end property had hardly seen any trading because from 2006-07 its value was manipulated due to speculation, inflating prices.

Dang Hung Vo, former Deputy Minister of Natural Resources and Enviroment, said that to stop speculation or manipulation, the current law should be amended so that ineffective or unreasonable use of land or houses could incur taxes and the more houses a person owns, the more taxes they should pay.

Prices in the low-end property segment are expected to fall in coming months as the Ministry of Construction builds more inexpensive apartments.

Other experts said that prices across the board were still inflated and that most properties in Ha Noi’s centre should range from VND12-15 million ($674-843) per sq.m and VND5-7 million ($281-393) per sq.m for suburban areas.

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