Real estate requires real reform
Vietnam Report, a well-known market survey and business ranking firm, identified the biggest problems in real estate: overly high prices of land and houses that far exceed average incomes as well as the development of the national economy and the real values of property.
Over-priced properties have affected socio-economic development negatively, preventing low income earners from purchasing a home.
People in Vietnam must save up to 80 percent of their income to purchase accommodations, a very high level in contrast to the average of 33 percent in other countries.
When land prices are high, money falls into the pockets of a small number of speculators, while farmers benefit minimally. Meanwhile, project investors and enterprises must pay more money for site clearance and land access. This means that final consumers will have to pay high prices for finished products. The report has also indicated that even investors and government agencies do not have adequate information about real estate projects.
Currently, Vietnam still does not have any index that can help “measure” the real estate market and there are no sufficient reports from local authorities that can provide general statistics.
Vietnam still lacks effective management of its real estate market. Real estate in new urban areas has sold out before projects are completed and many consumers buy apartments while they are still on paper.
Current laws lack regulations to protect buyers and in cases of disputes (prices are raised above previously committed levels or late completion of apartments), buyers are always the victims.
“Underground” real estate transactions still account for a big proportion of total transactions, even though the Government has decided that all transactions must go through real estate trading floors. A recent survey released at a real estate workshop claimed that 80 percent of transactions are still being carried out underground.
Despite these issues, real estate remains attractive to foreign investors, remaining the second-most attractive sector. Foreign investors have committed USD 12.54 billion in the last nine months alone. Of this amount, USD 3.65 billion worth of foreign direct investment (FDI) capital has been committed to the real estate sector, including a huge project worth USD 1.7 billion.
