The Vietnamese minister of construction last week warned of speculation in the local realty market, four months after he told local TV audiences that speculative activity was not the main cause of the recovery of the property sector this year.

Trinh Dinh Dung, Minister of Construction, told Vietnamese legislators in a Q&A session of the lawmaking National Assembly on November 17 that some signs of speculation had emerged as the local property market was warming up given the country’s sound GDP growth in 2015.

In July, Minister Dung said in a TV program aired on the national television channel VTV that the recovery of the real estate market in Vietnam does not result from speculation, for property prices in many segments are growing rapidly, with some nearing the peak of 2011.

The minister’s recent warning was given in reply to the question of Do Van Duong, a lawmaker from Ho Chi Minh City, about the hoarding phenomenon happening in a number of projects in the southern economic hub.

The phenomenon may lead to a property bubble, as happened several years ago, Duong said.

The minister of construction told the meeting that the real estate market has recovered positively since late 2013.

However, speculation often recurs when the market is getting warmer as is happening now, he said.

The prices of some properties sold to end-users in some projects are higher than the original rate, and prices have been hiked by developers in some other developments with fast construction progress, Minister Dung said.

The price hike has triggered many other projects to commence quickly, causing concern about a possible real estate bubble, the minister said.

However, as the head of the country’s realty and construction sector, the official cited a number of studies that said the bubble phenomenon only occurs in conjunction with specific conditions.

Those include one or many factors occuring at the same time, like the unstable performance of other economic sectors, a shortage of supply in the property market, loosened fiscal and financial policies, the securitization of realty projects, subprime lending, and a lack of state control, especially in urban management, he elaborated.

Minister Dung said it is difficult for a real estate bubble to form because the current macroeconomic recovery is quite sustainable.

Vietnam’s GDP grew 6.81 in the third quarter of this year from 6.47 percent in the previous quarter, according to the General Statistics Office.

According to the minister, the state management agency is keeping an eye on the development of the market so as to take timely measures when necessary.

According to a report of the Vietnam Real Estate Association in October, as of September 2015, the local property market had been improving compared with the same period last year, given positive signals in both liquidity and market inventories, leading to a decrease in inventory in both Hanoi and Ho Chi Minh City.

In Hanoi, there were over 1,600 successful transactions in September, down 16 percent from the previous month, but up 40 percent compared to the same period last year.

Totally, in the first nine months of 2015, Hanoi had about 5,300 successful transactions, up 70 percent against the same period last year.

In Ho Chi Minh City, around 1,550 successful transactions were recorded, down about 14 percent from the previous month, but up 55 percent over the same period last year.

As of the end of the third quarter, the southern city had had about 5,100 successful transactions, a 100 percent rise year on year.

As the number of transactions has steadily soared over recent months, by the end of September, inventories of real estate had declined significantly to VND59.39 trillion (US$2.61 billion), down more than VND900 billion ($39.6 million) month on month, and over VND69 trillion ($3.03 billion) vis-à-vis the beginning of 2013.

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