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Apartment buyers feel sick watching dollar rise   2010-08-23 - Viet Nam Net

The sharp dollar increase to 19,500 dong has made apartment buyers suffer, as the apartment are now much more expensive in dong. Real estate analysts note that the dollar price hike has made investment in apartments less attractive.



Trong Son, a department manager of a trading company in Hanoi is furious with the dollar price.


Son purchased an apartment at Viet Kieu Chau Au Village project and now he is scheduled to make a third phase payment for it. Yet, with the sharp increase in the dollar price, Son’s payment has increased by tens of millions of dong.


His anger stems from a decision by TSQ Vietnam, the project developer, which decided to delay the apartment payments to August 1-10 instead of earlier, at the end of the second quarter.


“Though the quoted price of the apartments is in dong, the project developer set the price based on the dollar. Since the dollar price has been increasing continuously, from 18,600 dong to 19,300 dong and then 19,500 dong, we lost tens of millions of dong,” Son complained.


Hanh, a television worker, has had to move heaven and earth to borrow money from relatives and friends, because she must pay $200,000 for her apartment at Van Phu project.


“If I paid at the beginning of the month, I would not have lost 20 million dong due to the dollar price increase,” Hanh lamented.


According to Hanoi real estate trading floors, most apartment prices are in dollars so that developers can stabilize prices and demonstrate a product’s high class.


Though current laws clearly stipulate that all transactions in Vietnam must be carried out in dong, real estate developers have ignored the laws and unflinchingly quoted prices in dollars.


The apartments at Indochina Plaza in Cau Giay district, for example, are offered at $2800 per square metre, Royal City $2000, U silk City $1600, Park City $3300, Tricon Towers $1400. Apartments at Block E, which has the lowest sale prices among the five buildings at Mulberry Lane, are being offered to sell at $1500-1700 per square metre.


A representative of a real estate trading floor in Hanoi remarked that price quotations in dollar influences the secondary market, where buyers want to set dollar price in accordance with the price quoted by commercial banks, while sellers want to set dollar price based on the black market, which is always higher than the banks’ price.


Over the medium-term, economists believe that investors may like dollars more than apartments.  They have also voiced their concern about the popularity of price quotations in dollars.


Dr. Vu Dinh Anh, Deputy Director of the Price and Market Research Institute under the Ministry of Finance, observed that the problem relates to so-called ‘dollarization’ – meaning the dollar could be used as a second currency in Vietnam.


Anh emphasized that the principle of “only Vietnamese currency used in Vietnamese territory” must be respected, and called on government agencies to take drastic measures to minimize dollarization in Vietnam.

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