Ex-deputy minister sees better time

Ex-deputy minister sees better times ahead for low-priced property market
The low-priced housing segment will improve next year, Dang Hung Vo, a former deputy minister of natural resources and environment, tells Vietweek.
Why does the property market not recover despite all the measures taken to revive it?
Because of the large investments involved, the property market has often a big inertia. It means it takes a long time for the market to recover from a period of sluggishness. If there is a boom, that too lasts a long time.
In 2013 we helped resolve many of the difficulties faced by developers like capital shortage and large inventories. The government has cut some of their taxes and land rent and extended the time for them to pay land use fee. It has helped developers overcome difficulties, but not yet affected the market.

This year the government rolled out a supporting package of VND30 trillion (US$1.43 billion) to spur the low-income housing segment of property market,

70 percent of it to subsidize interest rates for low-income buyers and the rest earmarked for developers of low-priced housing projects. The support for developers of low-priced housing has been effective though it has not really created many choices for consumers. The supply of low-priced commercial housing projects and social ones has increased. Early this year it was difficult to buy an apartment in social housing projects due to the low supply. But we can do it easily now, and have greater choice in terms of prices and locations.

However, disbursement of the package has been slow. The requirements for home buyers to demonstrate their loan repayment ability and housing situation are too complicated. So far over VND800 billion has been disbursed. It is too small. The disbursement should have been faster. The issue should be resolved in 2014.

If demand is spurred, the low-income housing segment could soon recover. This is a factor that could increase the confidence in the market, creating a foundation for dealing with issues in the medium- and high-priced segments.

Another issue we need to resolve but have not done much about is the inventory of medium- and high-priced housing. We have established the Vietnam Asset Management Company to deal with the housing inventory attached with bad debts. However, it has not been effective since we do not yet know what is form of bad debts structure in the housing inventory. In the beginning of the year, it was officially reported that almost all properties with bad debt were in the form of completed housing, but at the end of the year, statistical data show that 70 percent were in the form of residential land - without housing.

The property inventory has reduced slightly as the government has allowed developers to make changes to housing projects so that they could be used for other purposes or divided into smaller ones with lower value. We have done something to reduce the inventory, but the task at hand is still huge.

The draft revised housing law and revised real estate business law has an important renovation that expands real property market for foreign consumers. It is a good vision on resolving the housing inventory in current time and also for long term development of housing market.

There is a concern about excessive supply of low-priced housing in future, the same situation that existed with high-priced housing a few years ago. What do you think about it?

The concern is reasonable but comes too early since the supply of low-priced and social housing is still low. Many people have not yet been able to buy a low-priced house. We need to work out a housing planning and its implementation. We have yet several serious problems with urban planning based on population, housing, infrastructure, public services and not calculated the number of high, medium-, and low-priced houses we need.

The low-priced housing segment has developed only since 2009, so it is too early to worry about excessive supply in the segment.

But we need to make housing plans in a careful and feasible manner. This is a fundamental issue for a sustainable housing market.

Doan Nguyen Duc, chairman of Hoang Anh Gia Lai, has recently announced the company will pull out of the property market. Do you think it is because of the market situation?

I don't think one investor's decision can strongly affect the market. A company could decide to invest in a market and leave the market for another. I don't believe that an investor in Vietnam could affect the market. Vietnam has many property investors, including many big ones - Hoang Anh Gia Lai is just one of them. The property market was not controlled by Doan Nguyen Duc, so his decision will not have any impact on the market.

Have property prices bottomed?

Firstly, we need have a definition what is the bottom of market. I think we can agree that the bottom of housing market is the price calculated on production cost of house. In this meaning, they have fallen nearly to the bottom. Now you can buy a 40-50 sq. m house for just VND500-600 million. If it is reduced further, builders will face losses.

Obviously, we can do more to reduce the price, for instance by using more advanced construction technologies and materials and reducing management cost and also capital using cost.

How do you see the market next year?

The low-priced segment will see better growth next year. It will see a larger number of transactions. But we need to do more to help the market recover soon. The government should consider allowing banks to accept the huge volume of gold owned by people as deposits to develop the property market. The current policy, which does not allow gold transactions or deposits, has prevented the property market from benefiting.

The Housing Law and the Real Estate Business Law are in revising process and to be adopted by the National Assembly late next year. Under those laws, expats will find it easier not only to buy houses and also to have the transaction rights in Vietnam. This is a new decision and will contribute to strengthening belief and demand in the market.

Kết quả (Việt) 1:

Ex-thứ trưởng nhìn thấy tốt hơn lần trước cho thị trường rẻ bất động sảnCác phân đoạn nhà ở giá thấp sẽ cải thiện vào năm tới, Dang Hung Vo, một cựu thứ trưởng bộ tài nguyên và môi trường, nói với Vietweek.Tại sao hiện trường bất động sản không khôi phục mặc dù tất cả các biện pháp thực hiện để làm sống lại nó?Vì đầu tư lớn tham gia, thị trường bất động sản thường có một quán tính lớn. Nó có nghĩa là phải mất một thời gian dài cho thị trường để phục hồi từ một khoảng thời gian của sluggishness. Nếu có một phát triển vượt bậc, quá kéo dài một thời gian dài.Vào năm 2013, chúng tôi đã giúp giải quyết rất nhiều khó khăn do phải đối mặt bởi nhà phát triển như thiếu vốn đầu tư và hàng tồn kho lớn. Chính phủ đã cắt giảm một số thuế của họ và đất thuê và kéo dài thời gian cho họ phải trả lệ phí sử dụng đất. Nó đã giúp các nhà phát triển vượt qua khó khăn, nhưng chưa được ảnh hưởng trên thị trường.Năm nay chính phủ lăn ra một gói hỗ trợ của VND30 tỷ đồng (1,43 tỷ USD) để thúc đẩy các phân đoạn có thu nhập thấp nhà ở của thị trường bất động sản,70 phần trăm của nó để trợ cấp cho lãi suất tỷ giá cho người mua có thu nhập thấp và phần còn lại dành cho nhà phát triển của dự án nhà ở giá thấp. Hỗ trợ cho các nhà phát triển của giá thấp nhà ở đã được hiệu quả mặc dù nó đã không thực sự tạo ra nhiều sự lựa chọn cho người tiêu dùng. Việc cung cấp giá thấp dự án nhà ở thương mại và xã hội đã tăng lên. Đầu năm nay nó đã được khó khăn để mua một căn hộ trong các dự án nhà ở xã hội do việc cung cấp thấp. Nhưng chúng tôi có thể làm điều đó một cách dễ dàng bây giờ, và có sự lựa chọn lớn hơn trong điều khoản của giá cả và vị trí. Tuy nhiên, giải ngân của gói đã được làm chậm. Các yêu cầu cho nhà người mua để chứng minh cho vay trả nợ khả năng và nhà ở tình hình của họ là quá phức tạp. Cho đến nay trên VND800 tỷ đồng đã được giải ngân. Nó quá nhỏ. Giải ngân cần phải có nhanh hơn. Vấn đề cần được giải quyết vào năm 2014.Nếu nhu cầu thúc đẩy, các phân đoạn có thu nhập thấp nhà ở có thể sớm khôi phục. Đây là một yếu tố có thể làm tăng sự tự tin trên thị trường, việc tạo ra một nền tảng để đối phó với các vấn đề trong các phân đoạn trung bình và giá thấp.Một vấn đề chúng ta phải giải quyết nhưng đã không làm nhiều về là hàng tồn kho phương tiện và giá cao nhà ở. Chúng tôi đã thành lập công ty quản lý tài sản của Việt Nam để đối phó với hàng tồn kho nhà ở gắn liền với nợ xấu. Tuy nhiên, nó đã không được hiệu quả kể từ khi chúng tôi được không biết những gì là hình thức nợ xấu cấu trúc trong nhà kho. Vào đầu năm, nó đã được chính thức báo cáo rằng hầu hết các thuộc tính với nợ xấu đã trong các hình thức hoàn thành nhà ở, nhưng cuối năm, thống kê dữ liệu cho thấy rằng 70% là ở dạng đất khu dân cư - mà không có nhà ở.Hàng tồn kho tài sản đã giảm một chút như chính phủ đã cho phép các nhà phát triển để thực hiện thay đổi cho các dự án nhà ở để cho họ có thể được sử dụng cho các mục đích khác hoặc chia thành nhỏ hơn với giá trị thấp hơn. Chúng tôi đã làm một cái gì đó để làm giảm hàng tồn kho, nhưng công việc ở bàn tay là vẫn còn rất lớn.The draft revised housing law and revised real estate business law has an important renovation that expands real property market for foreign consumers. It is a good vision on resolving the housing inventory in current time and also for long term development of housing market. There is a concern about excessive supply of low-priced housing in future, the same situation that existed with high-priced housing a few years ago. What do you think about it?The concern is reasonable but comes too early since the supply of low-priced and social housing is still low. Many people have not yet been able to buy a low-priced house. We need to work out a housing planning and its implementation. We have yet several serious problems with urban planning based on population, housing, infrastructure, public services and not calculated the number of high, medium-, and low-priced houses we need.The low-priced housing segment has developed only since 2009, so it is too early to worry about excessive supply in the segment.But we need to make housing plans in a careful and feasible manner. This is a fundamental issue for a sustainable housing market.Doan Nguyen Duc, chairman of Hoang Anh Gia Lai, has recently announced the company will pull out of the property market. Do you think it is because of the market situation?I don't think one investor's decision can strongly affect the market. A company could decide to invest in a market and leave the market for another. I don't believe that an investor in Vietnam could affect the market. Vietnam has many property investors, including many big ones - Hoang Anh Gia Lai is just one of them. The property market was not controlled by Doan Nguyen Duc, so his decision will not have any impact on the market.Have property prices bottomed?Firstly, we need have a definition what is the bottom of market. I think we can agree that the bottom of housing market is the price calculated on production cost of house. In this meaning, they have fallen nearly to the bottom. Now you can buy a 40-50 sq. m house for just VND500-600 million. If it is reduced further, builders will face losses.Obviously, we can do more to reduce the price, for instance by using more advanced construction technologies and materials and reducing management cost and also capital using cost.How do you see the market next year?The low-priced segment will see better growth next year. It will see a larger number of transactions. But we need to do more to help the market recover soon. The government should consider allowing banks to accept the huge volume of gold owned by people as deposits to develop the property market. The current policy, which does not allow gold transactions or deposits, has prevented the property market from benefiting.
The Housing Law and the Real Estate Business Law are in revising process and to be adopted by the National Assembly late next year. Under those laws, expats will find it easier not only to buy houses and also to have the transaction rights in Vietnam. This is a new decision and will contribute to strengthening belief and demand in the market.