House commission urges government against bailing out property market

TN News

Email Print

The government should not lend a helping hand to the housing market since it does not have enough funds besides which it would spark off another wave of speculation, the Vietnamese parliament's Economic Commission has said.

In a report, it said many property developers have yet to cut housing prices to improve liquidity and have been growing a "completely false" expectation of a government bailout.

The government cannot afford to deal with property loans, estimated at VND203 trillion (US$9.7 billion) last August, of which bad debts made up 6.6 percent, it said.

Besides, any support could unintentionally encourage speculation since the industry would take government rescues for granted, it pointed out.

To bring real estate prices down, the government should make an announcement that it would provide no financial support to the stagnant property market, it suggested.

Prices have risen 100-fold in the last 20 years, Nguyen Tri Dung, the supervisor of a national project to improve the efficiency of economic planning, said quoting the Vietnam Academy of Social Sciences.

Sellers are pricing housing at rates that are 25 times the average wage, while the figures are seven times in Europe, 6.3 times in Thailand, and 5.2 times in Singapore, he said.

But the government should trim lending rates on property-related loans, which are now over 12 percent, he said.

Besides the high prices, the report said, the housing industry focused on the high-end and mid-priced segments for which there is not much demand.

Dung urged the government to offer financial and policy support to developers of affordable housing for low-income people.

Like us on Facebook and scroll down to share your comment

More Business News