With some Ho Chi Minh City apartment developers offering discounts of up to 35 per cent, buyers anticipate a firm downward trend in apartment prices.
The Saigon Times daily quoted Fiachra Mac Cana, CEO of Ho Chi Minh Securities Corp, as saying the housing market would see a rash of discounts by the end of the second quarter next year since developers were under pressure to clear their bank loans.
PetroVietnam Power Land (PVL), for instance, recently announced a discount of 34 per cent on units in its Petro Vietnam Landmark apartment in District 2.
It is offering 85 apartments at VND15.5 million ($756) a square meter, VND5.8 million a square meter lower than the price it paid to buy them from PetroVietNam Construction Land Corporation and VND8.3 million lower than the price it initially announced.
But the discount is only offered to those who buy wholesale or agree to pay 90 per cent of the contract, according to newswire VnExpress.
PVL said it would lose VND70 billion but had to resort to the price cut because it could no longer cope with the pressure from its VND100-billion loan from Lien Viet Bank.
Saigon Mekong Co cut prices by VND4 million a square meter to VND14.5 million for the 500 units in its An Tien apartment project in Nha Be District.
But the Saigon Times pointed out that many developers had begun to cut prices earlier in the form of promotions.
The director of a real estate company said the price-cutting trend was not new since many real-estate investors could no longer bear the loan pressure.
Insiders said the price cuts would not improve market liquidity this year since prospective buyers would wait for prices to slump further.
Chris Brown, deputy director of housing at Cushman & Wakefield Co, said investors had shown little interest in property though the stock and gold markets were volatile.
This had hit the HCMC apartment market, with prices declining by up to 20 per cent in the third quarter, he added.
Meanwhile, due to the market slump, many real-estate companies reported big losses in the third quarter even without cutting prices.
Phat Dat Real Estate Development Corporation, for instance, reported a loss of VND7 billion in the third quarter since it managed to sell almost no apartments in that period. In the first quarter it had incurred a VND14-billion loss.
The 584 Investment and Exploitation Traffic Construction Co reported a VND6-billion loss, saying it was mainly due to the high loan interest rates.
But VietCapital Securities Co said in a recent report it was too early to declare a downward trend in apartment prices./.
