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"Vietnam Real Estate - looking back 20 years": Drug fever

Post time: 12/10/2013

Forum opening theme for " " Vietnam Real Estate - looking back 20 years, " the South Real Estate Forum Dia ( DNRE ) has described the preliminary 3 " land rush " of Real Estate Market in Vietnam 1990-2010 period through which we can see that the real Estate market Vietnam always just " sauce " in one of the strongest segment featured : 1993-1994 with land and land use rights ; 2000 - 2001 Land and House facade project ) and from 2006 to 2007 with luxury apartments and villas .
Opening above article also stated at some given 3 times was the cause of " ups " , but no explanations or analyzes of 2 times the " downs " before and the " hibernation " of Estate Market Vietnam real in today's time . This second article will attempt to synthesize the judgment of the experts - the desire to explain that the " freeze " the past and the present depression .
The DNRE experts that can evaluate some of the most common causes leading to " freeze " on the real estate market as follows :


1 . The first reason : " The strong reduction " - is explained starting from the following causes :
1.1 The decline of real estate prices in Vietnam are assessed at too high compared to net income :
According to analysis on a French newspaper : " In Europe , a typical house prices usually 4-5 times annual salary , when this number to more than 6 times they 've seen it is not normal . And in Vietnam in 2010 per capita income in urban areas such as Hanoi , Ho Chi Minh City . HCM is about $ 2,000 / year , while the price of a popular low flat rate of about $ 50,000 here ie 25 times the annual salary . This shows that property prices in Vietnam are in the unusual compared with the average of the world. "
According to the rules of the market , when prices are too high compared to the actual income needs will naturally decline , this is the main reason for the real estate market in Vietnam with depression lately and is also one of the causes of the waves "frozen " 1994-1999 and 2002-2006 .
1.2 Psychology " wait " of people :
Since real estate prices have been assessed too high compared to the world and compared to the income of the people of Vietnam should people expect real estate prices down in the future . Also conducted by the State always tight and active management of real estate sales after fever and policies on management of State land in the process of editing and improving it 's psychological people are "waiting " after fever .
1.3 Market Demand for land purchase projects , apartments reduced by :
( i ) State land price adjustment : land price is adjusted each year in the direction close to the actual price to compensate for the cost of clearing up ( average cost of compensation and ground clearance in principle to people deal with this in accordance with the land Law 10 times higher than the previous compensation expense , which is not to mention the costs not included in the regulations as to support local clearance by faster) , the project should continue to invest difficulty of urban decline .
( ii ) profits from the real estate business plummeted : Due to the amount of capital to the real estate business is very large , the " liquidity " of the poor real estate market along with Real Estate " closed tape " and quickly reduce the temperature did profit from the business of real estate plummeted , while other areas of investment such as gold , foreign currencies , stocks , interest rates of government bonds , local interest banks have very high income levels . On the other hand , when interest rates rise , the cost of capital for a bank loan to invest in the project and also increased bank interest payable also increased , making the difficulty investors and people do not dare to borrow bank to buy a house . This causes investors to move the business into other areas of real estate .
1.4 Gold prices continued to rise past 2004 :
While property prices are considered too high , but when the transaction is often measured by the gold price of gold should rise more strongly contributed to the real estate market " freeze " more. Not only houses worth 200-300 gold trees froze almost entirely to the house that is priced at less than 100 trees . Land sales market projects , apartments , although not affected by the price of gold up to the cash payment , but as gold prices climb also led many investors have difficulty in disbursing with banks .
1.5 Negative in construction and land :
Also, not to mention the negative information in the public housing construction , the quality of construction works in general and in particular the quality of the apartment does not guarantee , the case improperly made ​​red book ... All these reasons make the real estate market in Vietnam after a " fever " becomes a phase of " freezing " 


2 . The second reason : " Provides increased " due to price Property of Vietnam is considered too high compared with the actual cost :
In terms of the cost in 2010 , according to the experts , the price of luxury apartments from floors 40-50 million m2 are higher than 3-4 times the true value . In addition to the land price , the unit price of the current construction cost per square meter to about 6-7 million , the price of real estate market in our country today is still too high compared to the actual cost of creating big profits for investors . This led to more expansion projects that supply increased rapidly , so in recent years in the land use planning , local to the land to build large housing projects construction condominium continually been started - especially in big cities such as Hanoi , Ho Chi Minh City . HCM ...
Reportedly, Hanoi ongoing investment program to build housing development fund more than 100 projects . According to estimates , by 2010 , the project will create an additional 10 million m2 of Hanoi for the fund . Also in the city . HCM is estimated that more than 50 condominium projects are under construction , with nearly 10 months to rise apartment in the city . HCM is constructed . According to the Pricing Committee of the City Department of Finance . HCM , is expected to land on registration of business through more than 1,000 investment projects currently 6,000 ha with a total investment of 136.000 billion. Tp . HCM is also expected to develop a program in 2010 to bring the fund up to 705,000 units. This is a very large figure , but with the current housing prices are very few people have enough money to buy this house .


3 . The third reason : Because the State shall take measures to cool the property market :
To address the changes in real estate market like this, the strict management and control of the housing market became urgent . The state agency had managed to rein in the "bubble " real estate land given back to the correct value with the actual value in order to encourage investment and production , stimulate economic growth . That is :
3.1 To restore the discipline , order and stable housing market , limit the purchase of land without legal papers and illegal land :
( i ) First, there is the 1993 Land Law and other legal documents related to land . 14/7/1993 Congress passed a new land law replaces the 1987 Land Law . Then two years - 1995 - Congress issued the first of the Civil Code under the new regime . These two texts mention the concept of land use rights and promote land use rights of households and individuals . In both texts , the State official may allow the conversion of land use , transfer , lease , mortgage , capital contributions and inheritance of land use rights . These are defined in accordance with market economy conditions . Contents of land use rights ( LUR ) is understood not only as the right to exploit the properties of the land for their own benefit but also to be understood in the second aspect , which is the licensing authority , also known as the right to dispose of land . But is not the owner , but the land use rights of land use right transfer money , was brought mortgaged land , the heir to the land use rights . The rights of land users is almost right then owner .
However, if the land use rights is called ownership is only the ownership restrictions . As shown limitations of land use rights in the following main points :
First, take the State 's right to recover any land when it is necessary and that the cost of compensation fixed by the State .
Second, the new State shall be entitled to convert the land use purposes , primarily through planning , land-use planning .
Third, power state specified conditions , order and procedures for implementation of the right to exchange, transfer , lease , mortgage , and bequeath land use rights .
Fourth, the State reserves the right to take land valuation ; implement transaction taxes on transfer of land use rights .
Failure to recognize the land use rights of land ownership creates arbitrary , unfair publicity in land acquisition , site clearance and compensation when the State recovers land .
( ii ) Under the direction of the Government dated 09.04.2002 , Hanoi People's Committee issued Directive 17 on a number of urgent measures and strengthen land management . In Ho Chi Minh City , on 22/04/2002 , Committee issued Directive 08 to reorganize and strengthen the management of State land in the city . The districts of Hanoi and Ho Chi Minh City . HCM has simultaneously implemented two directives in a synchronized manner and uncompromising . Following the 2003 Land Law and 2004 the Government issued Decree 181 dated 29/10/2004 regulated " project to build a new finish on sale " does not allow the sale of land has a strong impact on the market property . Project land market as paralyzed , by many investors is difficult enough force to make from start to finish a big project , especially for domestic investors and Decree 182 on treatment administrative violations in the field of land ;
After a few months , land fever in two major cities , Hanoi and Ho Chi Minh City . HCM has somewhat subsided , housing prices show signs of decline, state law violations such as land transfer , illegal leveling much reduced , the whirlwind of real estate acquisition have receded ... house and land to it , waiting to transfer rates up to make a profit decline . Housing prices in the provinces , cities , and other local people.
( iii ) According to many experts : " The recession hibernation of Real Estate Market in 2008 is completely different in nature compared to the phase of" frozen " market period between 2002 and 1994 -1999 -2006 . that is , in the phase of " freezing " before housing prices not only slowed down to wave " hibernation " market in 2008 , prices have fallen sharply in some southern markets . has reason that fundamental difference is by different causes : the waves "frozen " before the policy is due to land controlled by the impact of administrative documents ( corresponding to our land Law 1993 the Land Law 2003 ) . stroke " hibernation " since the beginning of 2008 is by tightening monetary policy to curb inflation , making capital into this market is reduced , causing a strong influence on local market buildings .
However, many people find that restraint creating "bubble " real estate to avoid dangers such as the financial crisis has occurred in many countries around the world , the real estate market and the depression expression setbacks in recent years has caused significant negative impact on the economy .
First, many businesses and people hardly pay bank interest and the Review of the Association of Real Estate Business Dist . HCM if this situation goes on there will be at least 30 % of businesses go bankrupt , is in the city . HCM was 50 % of the real estate business in the area have closed, 30 % moderately active , only 20 % is going to continue investing business . Also in Hanoi , if a few years ago , the office real estate transactions , and real estate companies have sprung up , this is no different to having floods .
Next to the bulk of the business enterprise real estate bust is the state budget revenues were significantly reduced and more serious will to turn the banks faced " bad debt " . According to incomplete statistics of the Ministry of Natural Resources and Environment is an investment in real estate business in our country that have over 60% of the bank loan . In Ho Chi Minh City area , there are about 4,000 individuals , business enterprises to invest in real estate with a capital of 50,000 billion VND , of which 28.000 billion as loans to banks . Although this number is not large compared to the total loans of the whole economy, the banking system , but the economic crisis in Thailand in 1997 as an example shows that after the collapse of the " bubble " property line is the disruption of the banking system and ultimately the consequence of a severe financial crisis has dragged the economy back in Thailand for decades .
At this point we can have 2 questions:
1. Is the premise of the 3 times "freeze" Real estate markets are due to policy intervention? In other words Real Estate Market Vietnam as unruly horse has 3 times the cage and the State also has 3 times the "GIM as" back?
2. The once "GIM diamond" has been affecting our economy happen from time to time specific?
The answer to question 2 above, DNRE Forum will move to the next article.

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