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Real estate bubble unlikely next year: HoREA
Saigon Times - 12/21/2016 8:13:46 AM
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A real estate bubble is unlikely to burst next year, the HCMC Real Estate Association (HoREA) forecast.

The association predicted the property market in 2017 will maintain growth momentum but a slowing trend this year will probably continue. In addition, there will likely be a big adjustment to address the supply-demand mismatch that is currently skewed towards the luxury segment, including resorts.

The market may also witness a major shift to the segment with affordable prices, meeting the real needs of the majority of average- and low-income earners in urban areas. In particular, the trend of cooperation between businesses will be inevitable, and project mergers and acquisitions (M&A) will grow stronger than before.

On another note, the market will need more than just regulations and tax-related tools such as  a tax on owners of multiple houses and property tax, credit which is restricted by Circular 06 of the central bank, planning for land use, urban development or housing and investors’ responsibilities to consumers (bank guarantees, confirmations of projects eligible for financing, and announcements of mortgaged projects).

A recent change is the size of the municipal realty market has expanded beyond the administrative boundaries of the HCMC metropolitan area, especially in the fringe districts. HoREA believe only green, environmentally friendly and safe projects can satisfy the requirements of investors and consumers.

On the property market this year, HoREA says there is still room for growth but the pace has slowed and potential risks have emerged, such as the supply-demand discrepancy, the sharp rise in the number of secondary investors, and the concentration of credit on major developers of high-end projects.

The detailed report of the association says an extra 30,000 residential products have been launched in the city this year. The HCMC Department of Construction has confirmed 57 housing projects as eligible to raise capital from buyers in the future with 29,017 units, including 27,792 apartments and 1,225 low-rise homes.

Specifically, 5,630 apartments are in the premium segment (20.3%), 16,750 in the intermediate segment (60.3%) and 5,412 in the affordable segment (21.6%).

Affordable housing accounts for 79.7% and is currently the key segment of the real estate market. However, the market is still short of low-cost and commercial housing products, particularly those for rent.

Some businesses have kept failing to fulfill their obligations to homebuyers. Many projects are not qualified, especially in terms of fire prevention and fighting, yet their products have been handed over to the buyers.

In many cases, buyers have been waiting years for their home ownership certificates. In some others, investors mortgage the apartments they have sold to consumers.

“This is a distressing issue, directly affecting the interests of consumers and requiring the State to act to handle law-breaking investors,” says HoREA.
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