While the government has acknowledged that cutting housing prices can be good for both realty firms and house buyers, property developers said selling a housing project for less than VND10 million per square meter constitutes dumping

The real estate market is currently facing serious issues, with relatively large unsold inventories, so the problem needs to be ironed out, said a senior state official at a recent meeting in Hanoi.

In particular, lowering real estate prices to make them more suitable to as many people as possible is a doubly effective measure which can help both property developers and home buyers, said Minister Vu Duc Dam, Chair of the Government Office.

While the former can recover their investments, the latter can fulfill their need for accommodation.

Regarding the fact that some businesses are selling their housing projects at a price that is considered an act of dumping, Dam said the judgment of whether developers are "dumping" or not should be addressed in accordance with law.

But lowering housing prices is consistent with the Government policy of assisting low-income people in buying an affordable house, he said.

The Government has assigned relevant ministries such as the Ministry of Construction, the Ministry of Finance, and the State Bank of Vietnam to implemente all possible measures for that purpose.

Dumping, or not

When Lai Chau Construction Co No.1, the owner of the Hanoi-based Dai Thanh condo project, announced that they would their apartments at VND10 million per square meter, many other property firms and representatives of state agencies said it was a sign of dumping.

Such a move could hurt competitors and create a wave of price cuts in the real estate market in the near future, they said.

For house buyers, it is a positive move and a signal that they will have a better chance to own a house with a fair price.

However, a number of other businesses have criticized the trend, stating that a housing project in Hanoi could not be priced at VND10 million per square meter if all possible costs are taken into account.

Nguyen Quoc Hiep, president of Global Petroleum Investment Corp (GP Invest), with 40 years of experience in the field of construction and real estate, said it is impossible to sell a projects for $ 8 - 10 million per square meter.

According to him, this is possible only when the developer used cheap or unreliable building materials.

"Even if the project owner of Dai Thanh used cheap materials, with a lift at half the price of ours, plus other costs, the price should be at least VND12 million per square meter.”

A representative of state-run Vinaconex fiercely protested the move, adding that the reduction of property prices for some of the current projects is "dumping".

According to Doan Chau Phong, Deputy General Director of Vinaconex, the recent strong price reductions of some investors show that they are not patient enough with the market, instead seeking to get out by dumping apartment prices.

"This will cause a psychological effect on house buyers, as instead of spending money to buy houses, they will wait, because everyone thinks there will be more price drops," Phong said. Phong has also directly recommended that the Ministry of Construction take steps to inspect the case, and set up a mechanism to protect real estate businesses.

The Vinaconex leader also said the dumping of the project will lead people to choose commercial over low-income housing projects after comparing the two.

Because, in fact, low-income housing prices in Hanoi, located far from the center area, are also priced at around 10 million per square meter, the same as a commercial housing projects.

"Many of our finished low-income housing projects have found it very difficult because people do not have the money to pay for them. With commercial housing projects now being priced that way, we will face more difficulties.”

After the Ministry of Construction said they would launch an inspection into the project, many tax and land management agencies in Hanoi said they will take similar action to check if the project owner has paid land use fees and taxes.

Hoang Anh Gia Lai Group was the first local realty developer to announce that its projects in Ho Chi Minh City would be sold at "dumping" prices with a declaration from its boss, Doan Nguyen Duc.

The announcement triggered widespread slight decreases in property prices in HCMC and Hanoi.

Not long after the announcement, the price of the Thanh Binh project in Ho Chi Minh City's District 7 was reduced about 30% compared to the neighboring projects in the same market segments.

The developers of a number of other projects in Hanoi, including VP3 Linh Dam, Mandarin Garden, and Golden Palace then made the same move with both direct and indirect price cuts for their customers.