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Real estate market to remain lackluster for 1.5 more years: experts   2008-05-27 - TienPhongNews

The real estate market shows signs of falling down as a result of the monetary policies and anxiety about the stability of the local currency.

Prof Dr Dang Hung Vo, former Deputy Minister of Natural Resources and the Environment, now head of the chair of land under Hanoi National University, said that in fact, policy makers want to recover the real estate market, but commercial banks are trying to tighten real estate credit by raising lending interest rates to overly high levels due to lack of cash.

“The lack of capital will continue putting difficulties on real estate and stock markets, which need investments, for 1.5 more years at least,” Vo said.

Dr Dinh Duc Sinh from the Real Estate Business Association is optimistic about the real estate market, but thinks that the market will continue falling for a long period more, and the time of recovery will depend on the effects of the government’s measures to curb inflation.

Le Xuan Truong, consultancy expert with B.D.S real estate firm, said that in Hanoi, the prices of houses and apartments have dropped by 20-30%; especially, the prices of luxury apartments have plunged by 40%. A 182 sq m apartment at Ciputra now has the contract price of $120,000 instead of $175,000 as several months ago.

According to B.D.S, transactions now are 1/10 of last month. “Clients come to real estate trading centres only to ‘explore the situation’; they aren’t spending money at this moment,” Truong said.

He added that the successful transactions at this moment are the ones which have the value of less than VND1bil. These people are making transactions at this moment because they have real demand for accommodations. Those who do not really want accommodations at this moment have delayed their purchases, hoping that the prices will go down further.

Also according to Truong, the prices of land and houses in the centre of Ha Dong city in Ha Tay province are decreasing sharply. Meanwhile, the prices of the land plots in some districts of Ha Tay province are increasing as the areas are thought will become a part of Hanoi in the future.

Vo said that what is happening now in the market shows that the overly high prices several months ago were the result of speculation. He said that if relevant ministries and branches strictly follow the government’s instructions, the real estate market will be more stable, and those who really need to buy houses for accommodation will have opportunities.

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