Vietnam not to compromise with real estate bubble

There was a time when Vietnam, prominent communist state in Indochina on the South China Sea was regarded as the vanguard of the proletarian struggle worldwide and the young generation used to consider it as a fiery example. However, days have changed and in this heyday of international market economy, Vietnam is also in search of apposite strategy to cope with the reality. Nowadays it is found busier and also more committed to save the realty sector of the country (especially the real estate bubble from inflating the way it did in 2007) instead of making barricades against foreign multinationals.

If you desire to ascertain its changing attitude, go through the following lines.

“We will focus on monitoring secondary investors, especially in the high-grade housing market, because [speculation by them] could be a decisive factor in prompting a market collapse,” Nguyen Manh Ha, Head of the Ministry of Construction’s Department of Housing and Real Estate Market Management.

It is to be noted that the most recent property bubble reached its pinnacle early last year after prices zoomed off the charts in big cities, because of high economic growth, a terrible deficiency of housing and weak government management, all of which gave rise to speculation. What’s more, in accordance with the government’s tightened monetary policies in mid2008, in addition to the global economic slump, the real estate market, in particular its luxury housing market, has been in near-hibernation.

It is also true that the market is gearing up owing to the government’s effort to loosen its monetary management so as to enhance growth, which was at a many-year low of 3.9 percent in the first half of this year. The central bank early this year did reduce the base rate to 7 percent, if compared with the peak of 14 percent last year.

As per CB Richard Ellis (CBRE) Vietnam report, reduced prices along with capital from the government stimulus and a recovering stock market have contributed to a boom in low to mid-range residential demand in Hanoi and Ho Chi Minh City.