Property market needs more gov’t supports

Many property companies look set to sell off their projects or holding to foreign investors as the housing “bubble” is about to burst, according to deputy director Nguyen Van Duc of property firm Dat Lanh.

The property market has been manipulated by speculators due to a shortage of the government’s measures, which can help the market develop appropriately (Photo: Minh Tri)

“Property firms can save themselves from the difficult time by reducing their profit margin or accepting small losses,” Duc says.

“They can reduce the input costs by applying advanced techniques into construction and focus on building small-size houses with low cost.”

Many property experts say the government should consider “loosening” credit to the market.

Nguyen Tran Nam, Deputy Minister of Construction, says the government has switched from “reducing lending growth rate on property investments” to “slowing down lending growth rate on property investments”.

Analysts say the change show the government starts loosening credit to property investments.

“Banks should loan individuals who want to buy houses worth below VND500 million (US$25,000) for each,” says Duc.

“They will only loan VND5 trillion for nearly 10,000 houses, which is equal to more than 2 percent of banks’ outstanding credit to property investments.”

Housing saving fund

Prime Minister Nguyen Tan Dung has approved a proposal by the Ministry of Construction to establish a housing saving fund.

The housing saving fund aims to assist low-income earners. Capital for the fund will be raised from their monthly salary at a fixed ratio, which is expected to amount to 1 percent.

The fund will be used to build houses to be sold or rented at low prices.

Those who deposit their money at the fund will be allowed to purchase house with their savings.

If they don’t want to buy house, they will take back the original sum plus the interest money at rate of 3-5 percent per annum.

Experts say the property market has been manipulated by speculators due to a shortage of the government’s measures, which can help the market develop appropriately.

“Tax rates on property investments remain inadequate. Financial policies are still unstable, of which most of loans for property investments are in short terms with fluctuated lending rates,” says a broker in Ho Chi Minh City.

By Do Tra Giang – Translated by Vu Minh

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