Friday , June 21 2024

Off-plan home buying makes prices surge: lawmakers

The popularity of off-plan property purchase in Vietnam has been pushing up prices to unusual levels and encouraging speculation rather than meeting real demand, lawmakers say.

Buying off-plan – purchasing a new home before the developer has finished building it – has become popular in big cities in recent years, Hoang Van Cuong, deputy principal of the National Economics University, told the National Assembly on June 20.

But many people buy homes early just so they can sell them for a much higher price later rather than to live in them, he said, adding that once completed, prices of these properties often remain flat.

To reduce speculation, laws need to be changed so that developers must issue bonds that can be converted into property units when construction is finished. This will ensure that buyers with real demand can access these units before their prices are pushed up, he added.

Minister of Finance Ho Duc Phoc said that some developers fail to acquire permits to use land but sell the property on them anyway, which resulted in many homebuyers not being granted title deeds for their units.

To avoid these situations in the future, real estate laws need to ensure that property developers must have a strong financial capability to acquire land use rights from the government before selling homes to buyers, he said.

Developers need to pay for the land before they start developing it, and not afterwards, he added.

Chairman of the National Assembly Economic Committee Vu Hong Thanh said that there is an imbalance property supply. There is an oversupply of high-end units, but a shortage of affordable homes.

Polices need to be changed to restructure the supply and to encourage investment in affordable property, he added.

Lawmakers are discussing changes in the real estate laws and will vote on them before the end of the year.

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