Speculative real estate prices fall but find few takers

They have fallen across the board with townhouses, villas, apartments, and land all being sold at lower and lower prices since the second quarter of last year.

But liquidity has remained low since last December, with many prospective buyers adopting a wait-and-see approach.

Prices of housing meant for buyers’ occupation have mainly moved sideways, decreasing by 5-7% in some cases.

Le Quoc Kien, a property analyst, said speculation has ended, the market is in a slump, liquidity has plummeted, availability of cheap money is over for now, and bank credit interest rates are high.

"The longer speculators hold on to real estate assets, the heavier the burden of interest. So they have reduced prices by 30-50% but are still finding no buyers."

Huynh Phuoc Nghia, a senior consultant at advisory firm GIBC, expected the challenges to continue in the coming quarters, saying the market has showed no signs of recovery.

The director of a property developer in HCMC said businesses, especially in real estate, which bought speculative assets, too have had to cut prices by up to 50% to try and sell them.

"Sellers lower prices, but it is a buyers’ market. The sellers have to reduce prices further, and so they are struggling with each other.

"This is the price to pay for half a decade of rampant real estate speculation by both individual and institutional investors."

The property market accounts for around 11% of GDP and has a close relationship with many industries that create a large number of jobs.

But since last year it has been facing difficulties due to tightened credit, excessive supply and lack of transparency. Many projects have been suspended due to a capital shortage.