Real estate sales by banks in a bid to recover bad debts were flooding property brokerage centres, with prices much lower than general price levels on the market, online newspaper vnexpress.net reported.

Tran Trung Dung, director of a property transaction floor in Ha Noi's My Dinh district, told the news website that 65 per cent of apartment blocks and lands registered for trading at his floor were consigned by banks, and the volume of these properties had quadrupled over the level from the same period last year.

Dung said most of the owners of these properties were investors who bought the assets last year and now couldn't cover bank loans. 

The director of a joint stock bank in Ha Noi said the increase in banks moving to sell real estate was normal in recent years as the market was sluggish and banks concentrated on dealing with bad debts. 

The director of another bank said banks were forced to take action as their debtors did not co-operate with them or they couldn't settle the debts themselves. 

Borrowers would be put at the greatest disadvantage as there were some properties that have seen their prices cut by half from up to VND10 billion (US$480,800) last year, he said.

Chu Tuan, a bank worker in charge of property sales at a local bank, reportedly said his bank was advertising six land lots and a house in Ha Noi's Ha Dong, Dong Anh, Gia Lam and Hoang Mai districts with prices ranging between VND8 million ($385) and VND36 million ($1,730) per sq.m. 

These prices were about VND2-8 million cheaper than current market levels and still negotiable, he said. 

Nguyen Van Duc from the Sozo Co was quoted by vnexpress.net as saying he was selling three land lots for the Viet Nam International Commercial Joint Stock Bankin Dong Anh with a price of VND14 million ($673) per sq.m, a rate he said was only 70 per cent of market prices. 

Thanh Nien (Young People) newspaper also reported similar cases in HCM City and the southern city of Vung Tau. 

The director of a commercial bank's branch in Vung Tau said prices of property sold by his bank were usually 10-20 per cent lower than market prices, it reported.

The bank was advertising a coastal villa at VND15 billion ($721,000), about VND2 billion ($96,150) cheaper than similar villas on the market, the director said. 

Despite cheap prices offered by banks, Duc said, trading was slow and most of his business was in helping banks sell small land lots with an area of about 50 sq.m. 

"Although mortgage assets are clearly registered to specific owners with sufficient ownership certificates, few clients were buying due to a sluggish market," Dung said. 

Trinh Cam Binh, a lawyer at the Bien Dong Law Firm, said many clients were interested in cheap real estate, but they were likely to face high risks in buying property offered by banks, as the assets were often the source of ongoing disputes between banks and their debtors. 

"This is one of the reasons that makes property sales by banks slow despite the low prices," he said. 

Dang Hung Vo, a senior consultant at the Ministry of Natural Resources and Environment, said that with current market conditions, banks should in fact reduce prices to enable those who truly have a demand for accommodation to buy property. "Banks' moves to sell property now face a generally gloomy market, and it won't be until at least the end of the year when the market improves and it becomes easier to sell these assets," Vo said. 

Source: VNS