The HCM City real estate market has yet to recover though there has been an increase in the number of transactions this month, an industry specialist told Thanh Nien.
HCM City Real Estate Association Chair Le Hoang Chau said the recent spate of successful property transactions many involving apartments was because of a section of genuine home-buyers who had been unable to afford a home until last year.Most transactions involved apartments costing less than 1.5 billion dong (US$91,660).
There has been no change in the status of top-notch apartments and hot property projects, Chau explained. "The previous market bubble saw developers ignore buyers who had a real need. "Now, since prices are more reasonable, some developers have shifted their focus to small apartments to attract [middle income buyers]."
The real estate market plummeted earlier this year, mainly due to the higher cost of construction materials and the government's tight monetary policies to curb inflation. But if past trends are a guide the slowdown is unlikely to last more than three-years, Chau said, adding "there are signals the market may recover by next year's end." These signs include the positive effects of the government's measures to curb inflation. The consumer price index (CPI) rose by 1.56% in August, much lower than this year's highest level of 3.19% in May.
Other causes for optimism include the fact that 40% of the total foreign investment has come into real estate and the market for low-income individuals remains relatively untapped.
Once inflation is under control, the government will loosen its current monetary policies, leading to the recovery of the property market, Chau predicted.
Market correction
"The current deflationary real estate market acts as a 'filter,' weeding out speculators," he said.
It also forces property developers to "restructure" their investment portfolio, he said.
"Businesses that had earlier invested in dozens of projects now have to cut their coat according to their cloth," Chau said.
Furthermore, the state of the market reflects "the government's efforts to fight property speculation through tightening control of credit," he said, adding this makes prices of apartments and land approved for housing projects more reasonable. He suggested that buyers should purchase what they need now because "prices are good and [they] have many choices."
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