Real estate sales pick up at low end of market

Real estate sales pick up at low end of market

(21-04-2007)

HCM CITY — Tastes on the HCM City real-estate market have made an about-face in less than a month time as buyers now prefer moderation to luxury. Market experts blame stock exchange volatility.

While housing sales and prices rose early this month, last week saw a dramatic drop in both aspects. Last week, buyers sought high-grade houses and apartments in spite of sky-high prices, but this week they have shifted their focus to inexpensive houses and land, said market analysts.

Le Hoang Chau, vice chairman of the Ho Chi Minh City Real Estate Association (HOREA), said early this month that prices in newly developed districts like 2, 7, Binh Chanh, and Nha Be rose 20 to 30 per cent in March while some District 7 property even doubled in value.

Tran Trong Nghia, a real estate broker at Dat Xanh Company in District 7, said that his office had to refuse several potential customers last week due to over demand and insufficient supply.

"But this week," he said, "more people want to sell land than buy it and we have a rather plentiful amount of properties."

Making prices public

HA NOI — It is still difficult for Hanoians to buy property at or near its original price because many investors who purchase houses on speculation do not make public how much they originally spent.
As a result, the second-hand property market is a dangerous place for potential home owners.
The Property Law, which took effect early this year, stipulates that real estate investors have to list their selling price at the Centre of Property Transactions under the city’s Natural Resource, Environment and Housing Department.
The problem is that the decree to implement the law has yet to be issued, putting consumers at risk of overpaying for property; they have not be supplied with the proper amount of information.
Currently, only a handful of large property developers publish their selling price, including the Manor of Bitexco, which makes it easier for consumers to determine how much they should pay.

Lam Van Chuc, director of the Phuc Duc Housing and Land Brokerage Company, said his companies’ transactions decreased 70 per cent this week over 10 days earlier.

Chuc said he has noticed that "Prices of land plots and apartments have begun dropping this week by between about five and 20 per cent."

Nguyen Van Thai, a broker at the Dat Pho Company, said, "We only sold two plots of land this week, one-tenth of last month’s figure."

Moderation boom

Since the luxury home boom in new urban areas like Sai Gon South calmed down after stock market winners made a slew of big purchases in March, low-priced houses and land plots in stable residential areas are now all that sells, according to market observers.

Recently, many property investors have flocked to buy houses and apartments at less than VND400 million, they said. Nguyen Phung Thieu, director of the Sai Gon Gia Dinh Real Estate Joint Stock Company, said the company has sold nearly 800 low-priced apartments in a complex that just began construction on April 9 in District 12.

"Houses and apartments priced between VND250 million and 400 million are very attractive to consumers, especially when they consider their budget," Thieu said.

Tran Hoai Trung working for a real estate company in Go Vap District said that in addition to new cheap apartments, cheap houses in old residential areas have sparked buyers’ interest.

Trung said that 10 buyers have registered to buy in old areas of Go Vap District to US$400 million, but that he only has three available.

Market observers said that the situation is similar in districts 8, Binh Thanh and Binh Chanh.

Phantom windfall

Explaining the market turnaround, experts said that March’s property fever was initially generated by the stock market boom.

Those who made a killing in stocks parked their profits in real estate particularly luxury houses and apartments, pushing up prices, they said.

So, when the local stock market showed signs of dropping, the local real estate also tilted downhill.

Do Thi Loan, secretary general of the HCMC Real Estate Association, also agreed that the rapid growth of the stock market had provided investors with big profits that they put into the property market.

However, Vo Dinh Quoc, deputy director of ACB Real Estate Joint Stock Company, said the last property boom did not match the one five years ago and could not last long.

"It was just a bubble pushing up prices and causing trouble for genuine buyers," he said. "This is because the market did not have the factors to create such a boom."

Director of the HCMC Economic Research Institute, Tran Du Lich, agreed saying that the real estate boom was a temporary phenomenon caused by windfall profits in the stock market.

He also said that there were signs it was speculative.

Tran The Ngoc, director of the HCMC Department of Natural Resources and Environment, said the local real estate market now operates not based on the supply and demand rule but on the "tacit" transactions of property project investors and speculators.

When the investors and speculators collude with each other it is easy for them to push up property prices, Ngoc said.

According to him, the market’s sudden changes would be controlled only when project investors’ "tacit" business is controlled. In addition, people should be educated not to invest following the "mob". — VNS