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Vietnam realty market recovery not due to speculation: construction minister

Thursday, July 16, 2015, 17:05 GMT+7
Vietnam realty market recovery not due to speculation: construction minister
Vietnamese workers are seen working at a high-end condominium project in District 3, Ho Chi Minh City, in May 2015.

The recovery of the real estate market in Vietnam does not result from speculation, Minister of Construction Trinh Dinh Dung said in a recent TV show.

>> An audio version of the story is available here

The minister’s statement was made in reply to a reporter asking him if the recovery is largely due to speculators, rather than homebuyers, in a program aired on national television channel VTV1 on Sunday.

The question by the reporter was based on the fact that property prices in many segments are growing rapidly, with some nearing the peak of 2011.

Minister Dung said that the realty market was in a frozen state in the 2011-13 period, thus there was no, or very little, speculation then.

Given that situation, many measures to remove difficulties for the real estate market were taken and the key orientation for the market recovery was implementing the national housing plan, meant to offer a variety of choices for homebuyers to rebalance market supply and demand, he said.

From the orientation, the main task was to restructure the market to diversify realty products toward real demand from local homebuyers with different rates of affordability.

Through these moves the market has recovered, partly thanks to a focus on the development of social housing in conformity with the national plan, thus helping promote economic growth and solve the problem of a supply shortage for local people with real demand.

Regarding the probability of another realty bubble, as what happened four-five years ago, Minister Dung said it is very unlikely that such a bubble will form despite the market recovery, increasing housing prices, and more money from the local banking system being channeled into the realty sector.

When housing transactions increase, the likelihood of the return of speculators is inevitable, he said.

The main issue is that authorities should keep an eye on the market to prevent it from overheating and becoming a bubble, the official added.

To achieve this it is necessary to strengthen control over urbanization and match the development of the real estate market with the implementation of the national housing plan, he said.

As the national housing plan was launched to create more houses for people, the market must also meet that need, and satisfying the need will surely help it attain sustainable development, Minister Dung added.

Thus, local governments should focus on building their urban development plans and establishing management and planning boards for urbanization in order to balance supply and demand, he concluded.

In recent reports on the local realty market, the two consultancies Savills Vietnam and CBRE asserted that it would be difficult for a housing bubble to form again.

The market situation now is quite different from that in the 2007-08 period, when there was surplus supply, as though supply is currently rising fast, the market absorption rate is also increasing rapidly, thus bringing in a balance between supply and demand, the two realty consultant service providers said.

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