Hanoi (VNA) 𓂃- Though the real estate market is said to be in a rather strong growth phase, it is still showing signs of slowing down and some unstable aspects, which could badly affect it if they are not addressed in time.

This judgment is based on the decrease in the number of successful transactions in the country’s two biggest markets, Hanoi and HCM City. In September, for instance, the number of transactions was respectively 1,100 and 1,050, down from 1,200 and 1,160 in August. One severe limitation in the market is an oversupply of high- and medium-end apartments and a shortage of products that most people can afford. Some analysts attributed the market slowdown to certain changes in policies by the State Bank of Vietnam (SBV), especially its hike in the risk index for lending for property and securities from 150 per cent to 200 percent. It also lays out a roadmap for reducing the cap on medium- and long-term lending using short-term funds from 60 per cent to 40 percent. The 30 trillion VND housing stimulus package launched in June 2013, which offered loans at a maximum interest rate of 5 percent to individual borrowers for a 15-year tenor, ended in June this year. This has made many low-income earners who had hoped to buy houses rethink their plans. Prospective buyers thus worry about the availability of money and have become more hesitant to enter the market. The recent increase in the prices of many real estate products and the strong return of investors in secondary properties have also contributed to volatility in the market, affecting affordability and thus liquidity year. Yet, despite the slowdown, analysts predicted the market to become more competitive in the final months of the year since supply of high-end apartments exceeds demand. In the third quarter, the supply of apartments in the Hanoi and HCM City markets increased sharply, with nearly 15,000 offered for sale, of which high- and medium-end apartments accounted for 50-60 percent, according to Vietnam Real Estate Association. The association also said thousands of new luxury apartments would come into the market by year-end but housing for low-income earners would be limited. Meanwhile, demand is predominantly for social housing. All this is likely to cause an oversupply of luxury apartments, thus sparking fierce competition. The main reason for this skewed situation is unplanned development, which was the main cause of the bubble that formed some years ago before bursting and leaving the market in tatters, according to experts.-VNA