VGP – The real estate market has been developing quickly over the past years due to overinvestment but it is time for regulators to screen it.
Overinvestment has made a huge volume of capital trapped in real estate projects and no lesson has been learnt yet.
In recent years, housing ‘fevers’ have ben noticed and high profits from land and housing deals have sent wrong signals of supply and demand of the market, leading to the state of too much investments going to the real estate sector.
According to a consultancy company’s statistics, Hà Nội and Hồ Chí Minh City have 38,500 and 18,000 medium-quality apartments, respectively, while the figures have not been totaled up yet in other localities.
Analysts estimated that it needs three years more for the market to absorb the unmarketable apartments in Hà Nội. Thus, within the next two or three years, if investors continue with new housing development projects, their decision would take its toll on the market.
Besides, the financial system exclusively designed for the real estate sector is still defected. Medium and long-term financial resources are still absent as capital is mainly sourced from people’s savings and banks, which offer limited amounts coupled with particularly high interest rates. As a result, more difficulties are challenging the market.
So, it is time for both developers and market regulators to work together to figure out solutions to consolidate liquidity of real estate products, particularly the apartment segment.
To have such solutions, first and foremost, administrative procedures relevant to housing transactions should be dramatically improved in order to create favorable conditions for the investors and set their mind at rest.
Furthermore, information ranging from land procedures, planning agreements, project ratification, and investors’ opportunities to get compensation for resettlement, healthy housing transactions and others must be transparent.
The Hồ Chí Minh City Real Estate Association estimated that the city needs some 30,000 apartments by 2015 to meet resettlement demand. Thus, the Municipal People’s Committee considered purchasing the current unsaleable medium-class apartments for the aforesaid purpose.
Meanwhile, the Hà Nội Municipal People’s Committee has, for its part, asked for speeding up resettlement projects.
Recently, the Ministry of Construction has also intended to purchase tenements for transferring them into public use (for officials).
If other localities put forward similar solutions like those of Hồ Chí Minh City, Hà Nội and the Ministry of Construction, the housing market will be back on track soon.
By Hải Minh