A number of property firms believe that Resolution 02 of the Government will be unable to save the ailing market.
A senior source from a realty company described the recently-issued resolution as a slight breeze sweeping through the frozen real estate market, but it has yet to touch on the key issues of the market, namely large-sized and high-end apartments.
Under the spirit of the resolution, commercial houses can be converted into low-cost homes. Moreover, a 50% value-added tax reduction is given to low-cost house developers, while those developing apartments smaller than 70 square meters and priced below VND15 million per square meter enjoy a 30% tax cut from July 1 to June 30, 2014.
In addition, the resolution says that low-cost house buyers should be offered low-interest loans with repayment schedules meeting their financial capability.
The resolution mainly focuses on the low-cost housing segment and orientates the market towards this segment. However, in this segment, the unsold products are mostly large-sized apartments and their volume is not high, the source remarked.
In order to unfreeze the real estate market, the entire inventory volume should be settled. Focusing on a small volume will not resolve anything, the source stressed.
Property firms are blamed for not building small-sized apartments, but they actually cannot do so because of regulation.
At present, apartment project owners must comply with the ratio 1:2:1, meaning 25% of the apartments are small-sized, 50% are medium-sized and 25% are large-sized. Many enterprises want this regulation to be removed.
Phung Van Nang, general director of Nam Viet Real Estate JSC, said that as the solutions are aimed at low-cost apartments, this won’t have much effect on the market.
The demand in the low-cost housing segment is still considerable, so this segment does not actually need the help, he said.
A market study of CB Richard Ellis Vietnam (CBRE) shows that the demand for condos priced at VND10-14 million psm is still very high. Property project owners with medium-sized apartments whose prices range from VND600 million to VND1 billion per unit have also recorded good sales results.
No new project satisfies the conditions of the resolution. Therefore, the market does not pin hopes on conversion of high-end condos into small-sized ones with reasonable prices, said property firms.
The Saigon Times Daily