Cooling forecast for 2017 property market

17:06 | 19/03/2017 Economy- Society

(VEN) - Vietnam Economic News’ Hoang Chau spoke with economist Do Thi Mai Hoa from the Vina-Sanwa Company Liability Limited - a joint venture between the Sanwa Holdings Corporation (Japan) and the Vietnam Construction and Import - Export Joint Stock Corporation (VINACONEX) - about the 2017 real estate market.  

cooling forecast for 2017 property market

Experts have discounted a real estate bubble in 2017 and predicted that credit for property projects would be strictly controlled. What do you think?

Personally I agree that there will be no bubble in the 2017real estate market because apart from supply that has exceeded demand, the high-end market segment has slowed down. Buyers are only those who have a real demand for housing. However, projects with good infrastructure and location still attract buyers. The average market segment will likely attract many buyers, but good infrastructure and location will still be important considerations.

In the third quarter of 2016, the State Bank of Vietnam made moves to control currency flows to the real estate sector, so I believe that the property market in 2017 will be “cooler” than previous years.

How will lending interest rates for real estate projects, and risks associated with rate increases, impact housing buyers?

Many banks, especially commercial banks, are saddled with bad debts. This reflects management weaknesses. Inflation has increased again after a period of stability. All of these are indicators that a reduction in the lending interest rate is unlikely. Although the State Bank has pledged to keep interest rates stable, in my opinion, it will be difficult to maintain the stability until the end of 2017. That’s because toward the end of the year, currency flows usually circulate strongly and therefore the liquidity demand increases considerably, creating heavy pressure on lending interest rates, in general, and those for real estate projects, in particular.

Prime Minister Nguyen Xuan Phuc recently asked relevant authorities to revise the 2013 Land Law in what is believed to be a move to tighten the property market. However, experts recommend that investors not be too dependent on policies and instead proactively regulate the market themselves. What do you think?

Finance and land are two of the four input factors of the property market, and changes in state policies impact these factors. Investors should observe and research both policies and market performance.

Some said that in 2017, bank cash flow to the real estate sector will be limited. What do you think?

The State Bank has decided to control credit for the real estate sector. I think this is the right decision to keep both financial and real estate markets stable.

Difficulties in site clearance, unknown land use charges, complicated administrative procedures and inappropriate credit policies are expected to impair the property market’s growth in 2017.

Hoang Chau