Real estate projects must now catch up with property demands
Article
(Listed Jun 30, 2009)
Chairman of the National Assembly Economics Committee Nguyen Duc Kien spoke to Thoi Bao Kinh Te Viet Nam (Vietnam Economics Times) about recent recovery in the real estate market. Why has there been a spike in land prices for certain projects, with price ranges increasing from 30 to 40 percent over those at the beginning of 2009?
The increase in price of real estate property is due to two reasons. Firstly, the Government stimulus package for real estate business has come into effect and revived the real estate market.
Secondly, the demand for property is on an upward trend, but the construction of real estate projects is still very slow, which might imply that the increase in land's price is a consequence of the mentality of people wanting to buy land rather than the real demand for land However, it's easy to recognize that the rise is contradictory to the Government' s policies of social security, such as building houses for low-income earners and the poor.
Therefore, we must determine whether the price rise stems from investor speculation or from the surge in costs for construction materials, which forced enterprises to raise property prices.
Besides people's demands, the increase in prices of construction materials such as steel, iron, cement, stone and sand also resulted in these lifted home costs. But the increase is not strong enough to push property prices to the levels where they are now. It is clear that the increase is abnormal.
Many people now use their free capital to buy and sell houses through middlemen and property transaction centres, which easily leads to speculation.
In addition, another reason is that real estate investors in urban areas are taking advantage of the relaxed conditions in the Government's stimulus package to lift up house prices.
How should authorities and people react to the market's current performance?
To control speculation, we should issue tax policies aimed at property companies, intermediary centres and transaction centres rather than trying to apply administrative management.
Through house-purchasing contracts, authorities should impose taxes to manage the operations of property transaction centres.
At the same time, by imposing the taxes, we will be able to see how real estate prices increase.
When using intermediary methods to buy houses, people should study clearly the rights and responsibilities of real estate middlemen. This will help them avoid fraud.
Chairman of the National Assembly Economics Committee Nguyen Duc Kien spoke to Thoi Bao Kinh Te Viet Nam (Vietnam Economics Times) about recent recovery in the real estate market.
