Realty index far from reality
Realty index far from reality Efforts to build the Real Estate Market Index (REMI) on a trial basis for a tool to gauge the property market have not borne fruit after more than one year since the Ministry of Construction issued a circular asking major cities to do so.
Many delegates told a seminar co-organized by Hanoi City's Department of Construction and CB Richard Ellis (CBRE) Vietnam last Thursday that quite many difficulties hindered such efforts to set up REMI.
It is hard to categorize some property categories. For instance, the circular specifies four categories or classes of apartments, but even competent authorities are confused about classifying such apartments, not to mention tax agencies or realty traders who do not have enough data to classify the apartments by themselves, said a representative of the capital city's Department of Construction.
Furthermore, monitoring the market is only possible if most transactions are conducted via registered trading floors.
However, only 20% of total transactions were made via trading floors, thus posing challenges for competent agencies to collect the data about the rest of transactions. That is not to mention the questionable accuracy of data provided by traders, said Ngo Huong Giang, chief of CBRE Research & Consulting Department.
Competent agencies take charge of valuating property prices, which makes REMI become subjective. Therefore, it will be another challenge to make the commercial property market become more objective.
Under a circular issued by the Ministry of Construction in 2010, four big cities namely Hanoi, HCMC, Danang and Can Tho must set their own property indices. The indices will be used as an instrument to gauge market information, paving the way for state-run agencies and investors to map out their strategies.
The indices are based on the data of key property types including properties for sale, rent and transfer, apartments, private houses and land lots.
The competent agencies must work in close collaboration with realty valuation firms over the issue. REMI must be recorded at areas with a large number of transactions, not those having individual transactions, said an official of Hanoi's Department of Construction.