(Biz Hub) Chairman of the Hoang Anh Gia Lai (HAGL) group, Doan Nguyen Duc, has publicly advised people to purchase apartments arguing that prices have fallen to the floor. Tuoi Tre (Young People) newspaper and Viet Nam News questioned him and economic analysts about the controversial advice.
The public has said the recommendation was your attempt to clear out your own property stock. Do you agree?
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Doan Nguyen Duc.
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Our group presently has no apartments to sell. Customers can only buy them on the secondary market. Even in two or three years we will still have no flats for sale. Our group has stopped all property projects in HCM City. If HAGL had even one apartment for sale, I would say so, otherwise the public would make fun at me.
So what pushed you to give the recommendation?
When giving the advice I just mentioned apartments (in the price range) for average and low-income people. I did not cover high-class apartments worth tens of millions dong per square meter.
My recommendation aims to alert customers not to miss a good chance to buy apartments because many people expect the price to drop much more sharply. Anyone who keeps an eye on the property market can see that prices have kept falling since 2008. This is mainly because many investors have lowered prices to recover their investment. From my point of view, prices are now at their lowest level.
I also want to advise customers to take advantage of preferential bank loan packages worth VND30 trillion (US$1.4 billion) offered by the Government. This will enable interest rates for low-income people to 6 per cent per year.
I said it was a good time to buy houses because of the subsidised interest rates, low prices and a wide variety of choices. If customers are hesitant to buy, I am afraid they are losing a great opportunity to own an apartment.
Once the market has warmed up, secondary investors will buy stock and prices will jump. By then, the preferential loans may no longer exist.
Despite the fact that property prices are constantly falling, buying an apartment is still beyond the reach of many ordinary people. What do you say about this?
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Preferential loans worth VND30 trillion ($1.4 billion) have been available since April 15. They are intended to warm up the property market.
The loans with interest rate of 6 per cent per year target low-income earners, workers in industrial zones and poor people in need of accommodation.
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I agree that property price are relatively high for most people. Nonetheless, it does not mean that property investors have pushed up prices. On the contrary, investors are cutting their profits to the lowest level. Some are even accepting losses in a bid to recover capital. There are many reasons for the high prices of apartments and houses in Viet Nam. Most are beyond the control of business.
It takes an investor at least five years to implement a housing project - three years for preparing administrative procedures and land clearance and two years for building. Loan interest rates for investors are too high. In addition, prices of materials and payment for workers keep increasing. Taxes do not fall while land-use fees spirals.
What do think of the Government's preferential loans?
I want to repeat that our group has nothing to gain from the preferential loan package. However, from my point of view, the Government-supported loan package is a crucial remedy. It is an arrow that reach many targets. The policy not only helps many people buy apartments, but also warms up the market, clears construction material stock and creates more jobs.
The policy will also help clear the capital flow of up to hundreds of billions of dong running from buyers to investors.
Tran Nhu Trung, Deputy Director of Savills Hanoi
In my opinion, for buyers who have a real demand, the right time to buy an apartment is anytime. There is no need to wait for the right moment. The market now has more choices of locations and apartments.
Dr Le Tham Duong, Head of Business Administration Faculty, HCM City Banking University
This is a rather good time for customers to buy flats and houses, but they should purchase completed ones in areas where the infrastructure has been completed. In my opinion, prices have not hit the bottom.
Nonetheless, I would advise people in need of accommodation to buy because they can save on rentals. Those whose budgets are not too limited should target middle and high class apartments.
Dang Hung Vo, former Deputy Minister of Natural Resources and Environment
Demand for apartments is large. If prices fall to VND8-10 million ($380- 480) per square metre, there will be even more sales.
I think purchasing power is not likely to improve remarkably in the near future. It's easy to understand why people wait for more discounts. I don't think the Government's preferential loans are a magic remedy that can immediately brighten the property market.
Phung My Hanh, Lecturer at Hanoi Civil Construction University
I agree that it's a good time to buy apartments since the price has reduced remarkably. Purchasers now enjoy many preferential policies from investors who want to recover their investment. Despite that, I predict prices will continue to decrease because supply is much higher than demand. The people who really have money to buy property are limited.