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Property trading floors help lower prices   2008-09-15 - VNS

 

While many new property trading floors are being set up in Viet Nam, probably only 20 or so have met the standards set down by the Ministry of Construction.

However, the real quality of the new services will be tested on the floor when new State regulations come into effect early next year.

The regulations state that all property transactions must be carried out on a trading floor, instead of mostly through private deals as at present.

Dang Hung Vo, former deputy minister of Natural Resources and Environment and a leading property expert, spoke to the Viet Nam Economic Times about the establishment of the floors.

He said many property trading floors being set up now, including online floors, provided little service.

"Establishers [of trading floors] hope to benefit from new activities of the property market, thinking that the more the market develops, the greater the need for property transaction floors," Vo said.

"The law on real-estate trading now regulates that all transactions involving housing projects sold for profit must be carried out through a property trading floor.

"Most investors in big projects want to set up their own floors so that they can be active [in carrying out transactions] – and strictly conform to the law.

"Some real-estate trading floors are formalistic rather than providing substance. Many simply provide classified property advertisements.

"But, when considering the role of trading floors in connecting sellers and buyers for easy and transparent sales, I think it’s good to have the (new) floors.

"There is a huge volume of housing and apartments being sold for profit and all go through many intermediary hands before coming into the hands of end customers.

"That situation is not good. It means the property market lacks transparency and, because of all the intermediate transactions, prices can skyrocket. "I have seen some housing projects that had to pass through up to seven intermediaries to reach the end users. The value of those projects, as a result, doubled from their initial prices.

"Real-estate trading floors can be a solution to that situation and bring property prices nearer to their real values," the former deputy minister said.

"If we expand the regulation to push all real-estate transactions onto trading floors, this will conflict with civil laws."

Vo said that it would be difficult to avoid different evaluations for property on the various trading floors.

"Evaluation results provided by trading floors simply provide reference prices," he said.

About the Real Estate Trading Law requiring only two professionals on each trading floor to be issued with property trading certificates, Vo said he thought the number of persons was not as important as the quality of those granted the certificates.

"The market will reject property trading floors that are weak and ineffective and favour those that are competent," he said.

"From a State point of view, I think, the most important thing is to focus on making regulations on dealing with losses of participants on the floors.

"In other words, the law on property trading needs to be clear on rights, obligations and the responsibilities of property trading floor organisers, especially the responsibility for financial losses.

Vo said that early this year, many offices held training courses and granted certificates to equip them for the new trading floors.

He said those granted the certificates were now fully qualified to join property brokerage and assessment activities.

"If new assessors are not sufficiently skilled, people wanting an assessment can use the services of a foreign service."



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