Houses Sell for Gold
The same applies to silver.
From Tuoi Tre, Ho Chi Minh City, Vietnam
Saturday, November 26, 2005
Over the last two weeks real estate agents have had few customers. Doan Khac Thuat, director of Saigon real estate trading, explained that the dramatic gold price increase has caused trading activities to come to a halt.
Currently payment in real estate is undertaken by gold, not cash, and with such a dramatic price increase, clients will have to pay tens of millions of Vietnamese dong more for a house valued at 1,000 taels of gold.
Mr Thuat related how a deal failed last week due to a last-minute decision, with the buyer refusing to buy a house when he heard that the price exceeded the threshold of VND 900,000. There is a tendency among buyers to wait for gold prices to cool.
Truong Anh Tuan, director of Hoang Quan Real Estate, also said that numerous deals fell through last week. He said that houses valued at 2,000-3,000 taels of gold cannot sell these days, and other brokers revealed that no successful deals have been made recently.
The price rise has brought loss to those who borrow gold to buy land and houses. Ngo Xuan Quy from Tan Phu district, Ho Chi Minh City, one such individual said that the gold price was VND 890,000 per tael when he borrowed gold but it has now risen to VND 940,000 per tael, equating to a loss of VND50mil over half of month.
According to Nguyen Ngoc Duong, deputy director general of Van Phat Hung, the continuous price increase will prompt investors to buy gold instead of houses and land as the profit made by real estate investment cannot offset the increase of gold prices. If the gold price keeps increasing, the real estate market will remain frozen.
According to Lam Van Chuc, director of Phuc Duc, the current real estate market has been narrowed compared to the same period last year. On Tran Nao and Luong Dinh Cua streets, where 110 real estate centers used to practice, there are now only 10 companies operating.
Mr Chuc went on to say that real estate businesses are facing big difficulties due to stagnant activities, while some have to pay large sums of interest to banks. "If the situation continues, 30 percent of real estate businesses will go bankrupt," he said.