Legal hassles deflate HCMC housing market

By Dat Nguyen October 31, 2019 | 04:58 pm PT

Apartment buildings seen in Binh Thanh District, Ho Chi Minh City. Photo by Shutterstock/Tommy Teo.

Only 12 housing projects received approval in HCMC in the first nine months of this year, a 72 percent year-on-year decline.

A recent report by the Ho Chi Minh City Real Estate Association (HoREA) said after reaching a five-year high of 83 projects in 2017, the number had dwindled to 59 last year.

The declining supply was due to conflicting provisions in the various laws regulating the sector, the report said.

The number of completed housing units in the first nine months of this year fell by 53 percent year-on-year to 12,453.

The supply shortage has pushed prices up, benefiting speculators, while affordable units fell to just 20-30 percent of new supply.

These issues have hit construction firms and equipment suppliers hard, while construction workers are facing lack of work.

If the government does not make amendments to resolve the conflicting provisions, the low supply could persist for years, and banks would have trouble recovering loans to real estate businesses, HoREA said. "Some real estate businesses are facing bankruptcy."

Other real estate companies have raised the same concerns. Property firm DKRA said the average price of an apartment in August had risen by more than 50 percent since 2015.

The prices are expected to keep rising due to a short supply since projects are taking a lot of time to complete legal procedures even as demand remains strong given the high migration to the city, it added.