Vietnam property prices expected to fall up to 50%

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real-estateVietnam’s property market is suffering from slow sales of newly built apartments in Hanoi, Ho Chi Minh City and other big cities and a general oversupply of residential units, according to land management officials.

Although average prices for apartments and other homes have already fallen sharply in recent years, they are expected to further decrease by 30 and 50 per cent in the coming months because of weak local demand.

Neither domestic buyers nor foreign investors are picking up enough property even at discount prices because both government incentives for domestic first-time buyers are too weak and traffic jams, high taxes and governmental policies are discouraging foreign investors.

In July 2013, the government introduced financial incentives totaling $1.42 billion for low-interest home loans and is also planning to provide $235 million to help low-income families buy houses between 2013 and 2015. However, a number of large commercial and housing projects remain lying idle, with unpaid bills resulting in heavy debts for numerous construction firms amounting to around $4.3 billion.

In its latest property report issued in August 2013, the Ministry of Construction said total property inventories in 56 out of 64 provinces in the country were valued at $5.48 billion, with land accounting for 39 per cent, high-rise condos 33 for per cent and houses for 28 per cent. Oversupply occurred with many properties types, including luxury houses and apartments larger than 70 square meters, which are out of touch for a majority of domestic potential home buyers.

Financial difficulties have forced many local developers, including well-known ones such as Hoang Anh Gia Lai Group and Petrovietnam Group, to exit their projects. Many others are desperate to exit because they face heavy debt, lawsuits and possible imprisonment.

The government of Vietnam has said it will revise the law to encourage foreign investment in the property market, including making it easier for foreigners  to own property. But high taxes and poor infrastructure remain burdensome, property firm CB Richard Ellis said in its August 2012 market review report.

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Reading Time: 2 minutes

Vietnam’s property market is suffering from slow sales of newly built apartments in Hanoi, Ho Chi Minh City and other big cities and a general oversupply of residential units, according to land management officials.

Reading Time: 2 minutes

real-estateVietnam’s property market is suffering from slow sales of newly built apartments in Hanoi, Ho Chi Minh City and other big cities and a general oversupply of residential units, according to land management officials.

Although average prices for apartments and other homes have already fallen sharply in recent years, they are expected to further decrease by 30 and 50 per cent in the coming months because of weak local demand.

Neither domestic buyers nor foreign investors are picking up enough property even at discount prices because both government incentives for domestic first-time buyers are too weak and traffic jams, high taxes and governmental policies are discouraging foreign investors.

In July 2013, the government introduced financial incentives totaling $1.42 billion for low-interest home loans and is also planning to provide $235 million to help low-income families buy houses between 2013 and 2015. However, a number of large commercial and housing projects remain lying idle, with unpaid bills resulting in heavy debts for numerous construction firms amounting to around $4.3 billion.

In its latest property report issued in August 2013, the Ministry of Construction said total property inventories in 56 out of 64 provinces in the country were valued at $5.48 billion, with land accounting for 39 per cent, high-rise condos 33 for per cent and houses for 28 per cent. Oversupply occurred with many properties types, including luxury houses and apartments larger than 70 square meters, which are out of touch for a majority of domestic potential home buyers.

Financial difficulties have forced many local developers, including well-known ones such as Hoang Anh Gia Lai Group and Petrovietnam Group, to exit their projects. Many others are desperate to exit because they face heavy debt, lawsuits and possible imprisonment.

The government of Vietnam has said it will revise the law to encourage foreign investment in the property market, including making it easier for foreigners  to own property. But high taxes and poor infrastructure remain burdensome, property firm CB Richard Ellis said in its August 2012 market review report.

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