House prices are still sky-high (*): Insiders speak out

The big barrier that makes it difficult to reduce real estate prices is that investment costs are too high

At a conference to discuss solutions to overcome difficulties in credit growth for production and business held last weekend, Prime Minister Pham Minh Chinh said that real estate businesses are complaining of difficulty continuing. access to capital.

But in recent years, real estate prices have increased in general. If there are difficulties but you still want to keep the selling price the same, still demanding one way, is there a shared responsibility?

Wanting to lose weight is not easy

Previously, in the meeting on "Continuing to drastically implement solutions to develop a safe and healthy real estate market" in November, State Bank Governor Nguyen Thi Hong also said that real estate businesses need to consider the problem of price reduction.

"Enterprises and real estate corporations themselves need to follow the Government's guiding spirit in Resolution No. 33, which is to have good corporate governance, balance profit goals, product structure, and consider reduce selling prices... Then, along with solutions from ministries, branches and localities, the investment demand of this market will be encouraged" - the Governor recommended.

A housing project is being implemented in Ho Chi Minh City. Photo: TAN THANH

The general director of a large bank also said that real estate businesses need to look back and change themselves to see if they are operating healthily and with transparent information.

If in the past, real estate businesses accumulated many projects during the period of easy capital mobilization, then when times are difficult, they need to sell off assets, must accept break-even or a small loss, and must coordinate with banks. To repay debt, we cannot sit still and wait for the bank to support or extend...

However, talking to a reporter from Nguoi Lao Dong Newspaper, the general director of a real estate company said that the company itself really wants to sell the project to pay off debt, and even does not want to do real estate anymore, but it is not easy, mainly because the project is entangled.

legal issues, problems with transfer regulations... And if the project continues, by the time the product comes to market, the price cannot be cheap because it has to bear a lot of costs.

As someone who closely follows developments in the market and real estate businesses, Mr. Tran Khanh Quang, General Director of Viet An Hoa Real Estate Company, said that in recent times real estate businesses have made great efforts to save themselves and survive. in. Businesses that are a little better are also worried about finding ways to revive the market to find a source of livelihood.

In fact, businesses in one way or another have proactively reduced product prices and project transfer prices to recover capital, but few investors have publicly announced this. "As far as I know, the transfer price of many projects has decreased by 20%-30% compared to last year. There are even projects where investors are forced to reduce by 40%-50% because it is too difficult.

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In the primary market, where products are sold directly to customers, businesses cannot announce price reductions compared to before but do so by offering preferential policies such as promotions and discounts of 5%. -10%, flexible payment, interest support, high discounts if customers pay early... Taken together, these policies have indirectly reduced 20%-30% compared to the market price" - Mr. Quang acknowledged.

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, also said that real estate price drops do not happen, but there has been a phenomenon of "vultures" looking for "corpse" and buying up projects at very cheap prices.

Too many barriers

However, in the long term, experts believe that it is very difficult to bring down the real estate price level because there are not only domestic enterprises but also many foreign investors in the market. Accordingly, foreign corporations investing in projects often choose high segments, good locations, complete legality and higher product quality than projects of domestic investors, so prices cannot be low.

When selling products to the market, they always calculate the output 2-3 years later, so the price is often very high. Foreign enterprises have advantages in capital resources and capital usage costs, so they are not under pressure to reduce selling prices.

According to Mr. Tran Khanh Quang, a major barrier that makes it difficult to reduce real estate prices is that investment costs are too high. "In the current project cost structure, construction costs have nearly doubled compared to 4-5 years ago, from 7-7.5 million VND/m3 to now more than 12 million VND/m2.

Land prices can increase or decrease, but they only account for 15%-20% of the total cost, the remaining construction costs account for nearly 40% of the total cost, in addition to many other types of costs" - Mr. Quang cited. .

Meanwhile, the general director of a real estate company with an unfinished project in Ho Chi Minh City acknowledged that the long-standing legal problems in recent years have made the source of completed real estate projects quite rare. Enterprises are struggling with old projects, have almost no new products to sell while demand is still very large, which is also the reason for rising housing prices.

In addition, inflation and high interest rates are also reasons that make it difficult for real estate prices to decrease. "In the case of having to reduce costs, it will definitely be a very deep loss because the enterprise cannot bear the increasing costs of the project" - the general director of this enterprise said.

Mr. Le Huu Nghia, General Director of Le Thanh Construction Trading Company, cited the reality of his company's social housing project despite being the leader.

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