While many experts believe that the real estate
market will be gloomy this year due to the State Bank’s policy on tightening
monetary policies, others believe that it is this policy that will make the
property market hot.

Contradictory viewpoints

In principle, after any other Tet holiday the real estate market would
be bustling because people usually jumpstart their new businesses. However, the
situation is quite different in 2011. Until now, people still do not know how
the property market will perform. Even experienced investors say they are
confused with contradictory information.

Some real estate trading floors have reported that many people have
offered to sell apartments they once registered to buy. The people said that
they do not have money to make payments on the apartments (the payment is made
in several stages) and they have to sell the apartments. Meanwhile, some real
estate developers have raised sale prices due to the dong/dollar exchange rate
(with the adjustment, the dong has lost 9.3 percent of its value), which has made
narrowed investors’ expected profit.

Some people have revealed that at the moment they are trying to sell
apartments because they have been warned about the expected low purchasing
power in the market this year. If they inject money in the property market now,
then they may incur heavy losses because prices will not increase this year.
Especially, the market may be frozen due to low demand.

However, while many people are worried about a bad scenario for the
market in 2011, other people still believe that property market would be a
profitable investment channel. They believe that when the inflation rate is
high, and the gold and dollar investment channels are frozen because the State
Bank is attempting to narrow the bar gold free market and shut down the foreign
currency black market, injecting money in real estate is the best choice. If
other people also think this way, they will try to invest in real estate, which
will push real estate prices up.

Deputy Director of Gia Nam Real Estate Trading Floor Tran Quoc Tuan said
since after Tet, at least 20 people have come to the trading floors every day
to seek to purchase apartments. He said that some days, he witnessed 3-4
successful transactions on the floor.

Who are the wise?

According to Deputy Minister of Construction Nguyen Tran Nam
agreed that the tightened credit will influence the real estate market, but he
said that the tightening will happen in a short term only. Moreover, he said,
the credit tightening will only mean that the cash flow from banks will
decrease. Meanwhile, the property market still can develop with idle money from
the public. This explains why the number of people who are trying to buy real
estate is also equal to the number of people who are trying to sell real estate
away.

Financial experts believe that for many years, real estate has remained
a profitable investment channel for investors with strong financial capability.
They also said that many powerful investors would see the tightening of credit as
a golden opportunity, because they can purchase land and houses at at low
prices and sell them later for higher prices when the market warms up.

Tran Manh Thang, Head of the Real Estate Brokerage Division of Van Xuan
Construction Company, agreed, saying: “2009 was a difficult year for the
national economy, but it was a time when our business ran better than in 2010”.

“At that time, many people spent tens of billions of dong to purchase
houses. This shows that the amount of capital kept among the public is very large,”
he said.

Also according to Thang, one should not draw conclusions about whether
the market will be hot or frozen right now. He said that every investor has his
own outlook on the market. Besides, whether or not to make purchases right now
will still depend on the financial capability of an investor.

Thang went on to say that one would be foolish if he flees from the
market now simply because one fears the market will be frozen.

“In the last 2-3 years, the real estate market sometimes cooled down, froze
and then heated up. However, the real estate price has been increasing stably,”
Thang said. “No real estate developer has reduced sale prices just because of
the low demand”.

C. V