This study allows the autor to focus on the one hand on clarifying some approaches to the methodology of the establishment of the REM index; on the other hand, it analyzes and evaluates the current status of establishment of Vietnam’s REM index. Also, it will illustrate the experiences of certain countries in determining the REM index and recommend some methods of application in Vietnam.
1 PREAMBLE Urgency of study Real estate market (REM) is an important market whose capital accounts for a large amount of the national economy The volatility of the REM has a direct impact on the economy and society Therefore, the measurement, the evaluation and the trend forecast of the REM’s volatility is a very important task in order to implement the policy of macroeconomic stabilization, to undergo timely reaction preventing and overcoming the instability, the collapse of the REM, to help the market players make suitable decisions consistent with the market trend Due to this situation, the author has chosen the topic: "Building indicators kit for real estate market (applied in the capital of Hanoi)" for his dissertation Overview of studies related to the dissertation REM index has been studied by several authors in the world such as Sherwin Rosen, Quigley Jaymon Mason, Bailey, Rebert J.Shiller, David Zetland and some Asian authors However, these studies have not figured out the establishment and calculation methods of the REM in certain emerging REMs There are also a number of studies on Vietnam’s REM index These are initial studies of their nature But they still have some shortcomings in calculation methods, data collection Purposes of study This study allows the autor to focus on the one hand on clarifying some approaches to the methodology of the establishment of the REM index On the other hand, it analyzes and evaluates the current status of establishment of Vietnam’s REM index Also, it will illustrate the experiences of certain countries in determining the REM index and recommend some methods of application in Vietnam On the basis of the findings, this study will help propose the orientations, the solutions to the improvement of establishment of Vietnam’s REM index until 2020 and the years to come Objects and scopes of study Objects of study: the index and methods of determining the REM index which is suitable for Vietnam This study encompasses only the establishment of certain subindex of the the REM index on a small scale (REMI index) such as real estate price index and residential transaction volume, one of the most important index of the REM Analyzing and evaluating the current status, this study focuses on the period from 2000 to 2014; Caculating and verifying the method of determining the REM index, it concentrates on REM of Hanoi City from 2011 to 2014 Approaches and methodologies REM index was studies in a systematic, synchronized manner and in a context of in Vietnam’s emerging REM whereas the information system is still incomplete This study uses a combination of research methods Qualitative research has been conducted by interviewing the specialists of the establishment of the REM index Quantitative research has been used in order to calculate the REM index of Hanoi City Distributions of the study Academic approaches: (1) Systemize the basic theoretical approaches to the measurable indicators and methods of determining index measuring the evolutions of the REM; (2) Complete the necessary procedures to establish the REM index Empirical approach: (1) Study the experiences of certain countries which have successfully established the REM index; (2) Analyze and evaluate the current status of REM index in Vietnam in recent years; (3) Calculate and determine the REM index of Hanoi City based on the generated methods; (4) Propose groups of solutions to complete the establishment of Vietnam’s REM index in Vietnam until 2020 and the years to come; (5) Propose groups of necessary conditions to ensure the completion of the proposed solutions to the establishment of Vietnam’s REM index Structure of the study This study has been divided into chapters Chapter 1: Chapter 1: Some theoretical and practical approaches to the establishment of the REM index Chapter 2: Current status of the establishment of Vietnam’s REM index and the calculation of the REM index of Hanoi City Chapter 3: Orientations and solutions to the completion of Vietnam’s REM index until 2020 3 CHAPTER SOME THEORETICAL AND PRACTICAL APPROACHES TO THE ESTABLISHMENT OF THE REM INDEX 1.1 Overview of real estate and real estate market (REM) 1.1.1 Overview of the real estate 1.1.1.1 Concepts of real estate: Different concepts of real estate can be generalized as follows: “Real estate is not only the immovable properties, ground resources but is all that is created by human labour attached to land under the three-dimensional space which constitutes a physical and functional form with determined structure.” 1.1.1.2 Features of the property: Each real estate has a certain number of attributes; amongs which the fixity is the most important attribute deciding the value of the real estate once being considered as a product on the market 1.1.2 Overview of the real estate market 1.1.2.1 The concepts of real estate market: real estate market is a combination of real estate transactions based on commodity relations, currencies whereas the mechanism is influenced by the expectations of the market participants adjacent to the governmental and political intervention in the market 1.1.2.2 The segments of real estate market: real estate market has different segments depending on the purpose of classification and the nature of real estate commodities 1.1.2.3 The characteristics of real estate market: besides the common characteristics like other markets, real estate market has its particular characteristics 1.1.2.4 The role of the real estate market: real estate market an important role in the socioeconomic development 1.2 Theoretical approaches to the establishment of the REM index 1.2.1 Definition of the REM index The REM index encompasses different indicators which are established based on the principles of statistical sience It provides the measuring tools and the indicators for the status of the REM for certain market areas throughout different periods 1.2.2 The roles and significance of the REM index The REM index is essential for the citizens, real estate investors, financial institutions, policy makers and other real estate market participants The REM index can also be used to predict the evolution trends of the REM in the future 1.2.3 Classifications of the REM index 1.2.3.1 Pursuant to the purpose of use of the index: The index includes the indicators reflecting the supply and demand of real estate; the market size; the price and trade trends; the balance and imbalance of the market and finally the transparency of the REM 4 1.2.3.2 Puruant to the aggregate-level of the index: the REM index includes the individual one and the one in the aggregate (on a small and large scale) 1.2.4 Method of determining the REM index, advantages and disadvantages of the different methods 1.2.4.1 Method of determining the REM index The methods of determining the REM index have individual characteristics such as method of simple average; method of weighted average Using econometric model to determine the REM index includes a number of different methods, but in general concentrates on the Hedonic Pricing Method (Hedonic); Repeat sales regression and Mix-adjusted method 1.2.4.2 The advantages and disadvantages of the different methods of determining the REM index: The calculation of the REM index is difficult due to the particular characteristics of real estate products These characteristics result in different advantages and disadvantages of each method Therefore, the user has to analyze and evaluate in order to find out the appropriate method 1.2.5 Influencing factors of the determination of the REM index The transparency of the REM Indire ct factor The role of the state administration vis-à-vis the information system of the REM REM index s Mindset, perception of the role of the index Receiving possibility of the input information Direct factor s Market allocation Method of determiing the index Resources to establish the index Source: Data collected and processed by NCS Diagram 1.1 Influencing factors of the determination of the REM index The calculation process of the REM index is influenced by many factors, including indirect factors and direct factors 5 1.2.6 Establishment procedure of the REM index The establishment procedure of the REM index can be generalized as follows: allocate the market and select the representative real estate product; collect data in the initial period, collect data in the reference period, calculate the REM index 1.3 The experiences of certain countries in determining the REM index and lessons for Vietnam The experiences of certain countries in establishing and publishing the REM index could be considered as lessons in establishing Vietnam’s REM index That is to say that the transparentising of the REM information plays an important role for the information source, data in order to calculate the REM index; the indicators which reflect the volatility of the real estate prices and real estate transaction volumes are very important; the used index must be consistent with the characteristics of the real estate market and the collection possibility of the respective data; the selection of the range of the REM index depends on the level of evolution of the REM; The frequency of the REM index depends on the level of development of the market and the capacity of calculating the index; the selection of method of determining of the index must be consistent with the data collection possibility; the establishment of the REM index has to follow certain procedure and the organization of the establishment of the index could be undertaken by different entities 6 CHAPTER CURRENT STATUS OF THE ESTABLISHMENT OF VIETNAM’S REM INDEX AND THE CALCULATION OF THE REM INDEX OF HANOI CITY 2.1 Summary of the development process of Vietnam’s REM 2.1.1 Development phase of the unofficial REM After 1954, the REM has not formed in Vietnam yet Since 1986 only few types of markets have been formed, but not the REM due to the lack of legal framework for its operations The 1980 constitution has neither provided an enough legal framework for the operations of the REM in a legal manner 2.1.2The formation and development phase of the official REM The 1992 Constitution has created a legal framework for the constitutional and official formation of the REM Along with the amendments of the 1992 Constitution, the land law enacted in 1993 has enabled the legal framework for the development of the REM The year of 1992 is considered as the first milestone of the official formation of Vietnam’s REM Since then, the REM has developped with various vicissitudes 2.2 Analyze the current status of the establishment of Vietnam’s REM index in recent years 2.2.1 The determined REM index 2.2.1.1 The REM index determined by the market participants: In recent years, the real estate consultancy organizations, real estate brokers, real estate financing organizations, real estate trading companies have conducted the data collection, calculation in order to determine some index related to the REM 2.2.1.2 The REM index determined by the state authorities: Pursuant to the Circular No 20/2010 / TT-BXD dated October 27th, 2010 of the Ministry of Construction, Hanoi City has been establishing and publishing the apartment price index 7 Mid-range apartment High-end apartment Mid-range apartment Mid-range apartment Mid-range apartment Mid-range apartment Source: Data retrieved from the Department of Construction of Hanoi City and processed by NCS Diagram 2.1 Apartment price index of Hanoi City Danang, Ho Chi Minh and Can Tho cities haven’t established the REM index yet The General Statistics Office Of Vietnam publishes the housing prices and building material prices The National Financial Supervisory Commission has also analyzed, evaluated the development status of the REM, the capital market, money market and the housing price evolution over the years 2.2.2.2 The real estate price index determined by the method of average prices: transaction volume index and price index of each specific real estate product will be determined based on the average arithmetic values of the transactions volumes and price index of each specific real estate product, specific project, one or several areas of the local market 2.2.2.3 The real estate price index determined by the method of combination-adjusted: The real estate price index will be determined by the method specified by the Ministry of Construction, namely the arithmetic average method This is a combination of the average (arithmetic and weighted) values and the real estate valuation and adjustment techniques By its nature, this method of determining the real estate price index specified by the Ministry of Construction can be considered as one kind of the method of combination-adjusted which is already applied worldwide 2.2.3 The establishment procedure of the REM index: The establishment of the REM index determined by the market participants can be conducted in particular manner The establishment of the REM index determined by the state authorities will be conducted in common manner 2.2.4 Types of REM index publishing The REM index can be published via the trade publications, the flyers, the websites, the public media and the conferences 2.3 Overview of current status os the establishment of Vietnam’s REM index 2.3.1 The achievements The REM index established in the recent years are the remarkable results, the premises to find out more solution to the completion of the procedure and methods of determining Vietnam’s REM index in the years to come 2.3.2 Limitations and weaknesses - The quantities of information reflecting the status and development trend of the REM are very limited - The qualities of information reflecting the status and development trend of the REM are still inadequate Table 2.1 The reliability of information reflecting the evolution of the real estate prices Unit: % Information provider Authorities Real estate exchange Real estate investors Public media Number of responses 125 125 125 125 Very reliable 24 13 17 14 Reliable Unreliable 65 33 38 24 11 54 45 62 Source: Data collected from survey by NCS The above-mentioned information shows the fact that the information provided by the real estate trading companies, real estate exchange and the public media has a low reliability while the one provided by the state authorities has higher reliability but is very limited 2.3.3 Roots of the limitations and weaknesses 2.3.3.1 Objective root a) Low level of market transparency of the REM: - Information related to the development of REM: The access to the information related to the development of the REM and respective real estate projects is very limited 2.3.3 The cause of these problems and limitations 2.3.3.1 Objective reasons a) The transparency of market information is not high real estate: 100% 90% 13% 16% 18% 41% 31% 53% 80% 70% 60% Sau quy hoạch điều chỉnh Trong giai đoạn thực quy hoạch 50% Sau công bố quy hoạch 40% 30% Không quan tâm 43% 21% 34% 13% 9% 8% Giai đoạn 20062008 Giai đoạn 20092011 Giai đoạn 20122013 20% 10% 0% Source: Data retrieved by NCS from various reports of the Ministry of Construction Graphic 2.2 Portion of citizenship who knows the planning information This current status shows that the publicity and transparency of information related to the implementation of the master plan is inadequate - Information related to the real estate status: Table 2.2 Ratio of the issuance of land use rights certificates in some cities Unit: % Cities 2008 2010 2012 2013 Hanoi 34 62 68 79 Ho Chi Minh 38 65 74 83 Source: Data retrieved from the state authorities’ reports by NCS In reality, the transparency of the current real estate status is still at a low level The process of issuance of land use rights and house ownership certificates is delayed and has caused the lack of legal basis of a considerable portion of the real estate As a result, they cannot be circulated officially on the market - Information related to real estate transactions: in reality, the real estate transactions in the unofficial market still account a big number; the access to the information related to the real estate demand, transaction prices is still limited 10 Source: Data retrieved by NCS from the reports of the Ministry of Construction as of 2013 Diagram 2.3 Types of real estate transactions b) Mindset vis-à-vis the role and the significance of the REM index doesn’t meet the requirements: The state authorities are not fully aware of the role and the significance of the REM index Therefore, the issuance of policy and the development of the implementation plan is still delayed; it’s difficult for the local authorities to coordinate c) The roles of the state administration vis-à-vis the REM information remains limited: The state assumes the regulatory, market orientation roles by providing a legal framework so that the market players can access the information in an easy and official manner But in reality, this fact is still inadequate and hasn’t created a fairness, equity in the market d) Lack of experiences in establishing the REM index: the experiences of the advanced countries in establishing the REM index haven’t been gained systematically in order to be applied in Vietnam 2.3.3.2 Subjective roots a) The access possiblity to the information and statistical data related to the real estate provided by the state authorities is restricted: the way of setting up the information system of the REM doesn’t meet a standard Therefore, it hampers the access possibility of the REM information which is require to establish the REM index Table 2.3 Status of the access to REM information Unit: % Number of Easy Difficult Crateria Access responses access access Information related to real estate 125 16 development plan Information related to the status of the 125 12 REM Information related to the real estate 125 17 transactions Source: Date collected from NCS’ survey 38 46 52 36 35 48 11 b) The range of the determined index is not consistent with the actual development of the market: the way of determining the market area in the course of the calculation of the REM index doesn’t reflect the difference of the market trends c) Methods of determining the REM index is still inadequate: simple calculation methods are mostly used Method of determining the REM index specified by the Ministry of Construction was initially approached the ones applied worldwide The calculation techniques of this method is more complicated, but still inadequate d) Resources for the establishment of the REM index are very limited: the data collection, the calculation of the REM index face difficulties in terms of cost planning, cost allocation to hire consulting agencies to carry out this task e) The sanctions relating to the responsibilities for the information providing and the establishment of the REM index are incomplete: The responsibilities for the information providing and the establishment of the REM index at the management level specified in the legal documents are not efficient enough 2.4 Calculate the REM index of Hanoi city 2.4.1 Summary of the development process of Hanoi’s REM 2.4.1.1 Overview of Hanoi City: Hanoi is a city with special characteristics It is also the capital of the Socialist Republic of Vietnam According to the urban planning, Hanoi’s spatial organizations of Hanoi will be developped accordance with the model of conurbanation 2.4.1.2 Overview of Hanoi’s REM development: Likely to the REMs in other Vietnam’s large cities, Hanoi’s REM has experienced different development periods from its date of origin till this day 2.4.1.3 Overview of the price evolution of Hanoi’s real estate from 2000 till this day: From 2000 till this day, Hanoi’s real estate prices have experiences different growth and decline periods The first period was from 2000 till 2006 as the growth period boomed in 2000 and ended in 2003 while the decline and freezing period happened between 2004 and mid 2006; The second period started from the mid 2006 and lasts till this day as the growth period started in mid 2006 and ended in 2008; the downward drift, the decline and freezing period happened between 2008 and mid 2013, and the recovery period started in end of 2003 and lasts until this day 2.4.2 The requirements of the index, index type and method of determining Hanoi’s REM index 2.4.2.1 The requirements of the index: Hanoi’s determined REM index has to fulfill some basic requirements 2.4.2.2 Index selection: The REM index has synthetized characteristics on a small scale (REMI index) is the most expected index The REMI can be determined as per following 12 formula: a.I pricet b.I salest c.I dayt REMI t 100 REMI1 (2.1) In which: - REMIt: REM index in the reference period; - REMI1: REM index in the initial period; - a, b, c: weighted factors which measure the degrees of influence of the real estate transaction prices, the transaction volumes and the numer of days of successful transactions; I ,I ,I - pricet salest day t : volatility of the real estate prices, the transaction volumes and the numer of days of successful transactions at the date of initial period The basic disadvantage of the REMI index is the difficulty in determining the exact influencing proportion of each weighted factors (weighted factors a, b, c) and in determining the exact duration of the successful transactions Therefore, the selected index types are the subindex of the REMI index, including REM index and the index of Hanoi’s apartment transaction volumes Hanoi’s REM index is determined for the period from the quarter of 2012 until the quarter of 2014 on the basis of quarterly frequency First quarter of 2011 was selected as initial date 2.4.2.3 Select the method of determining the index: Hanoi’s REM index will be calculated by applying the method of determining specified by the Ministry of Construction as per following general formula: a) For the REM price index: n RPI W B ÐSj j 1 n WB ÐSj I j 1 (2.2) B ÐSj In which: - RPI: REM price index of Hanoi city; - I B ÐSj : Price index of the real estate number j (j=1n); - WB ÐSj : weighted transaction value of the real estate number j; - n: number of real estate types which was selected to calculate the index 13 b) For the real estate transaction volume index: n Q K j 1 s B ÐSj 100 % n K j 1 (2.3) o B ÐSj In which: - Q: real estate transaction volume of Hanoi city; - K sB ÐSj : successful transaction volume of the real estate product number j of Hanoi City in the reference period (j=1n); - K oB ÐSj : successful transaction volume of the real estate product number j of Hanoi City in the initial period; - n: number of types of real estate products in the examined area However, the above method needs to be adjusted some limitations concerning the area allocation, the way of determining the apartment transaction price index of Hanoi city in accordance with the transaction price index of each type of apartment in the city as a whole and the conversion of the classification pursuant to types of apartment into the classification of the apartment pursuant to the types of apartment 2.4.3 The order of the steps taken to establish the REM index of Hanoi City The transaction price index and the apartment transaction volume index of Hanoi City can be established by following the below steps: Step 1: Allocate the market and select the reference apartment: The results in observing the proportion of the apartment transaction volumes in the examined area pursuant to the administrative borders in Hanoi City is the basis for the market allocation Table 2.4 Apartment transaction volume ratio of Hanoi City Ba Đình Transaction volume ratio (%) 1,66 Đống Đa 2,02 Hai Bà Trưng 8,74 Cầu Giấy 7,63 Thanh Xuân 15,82 Tây Hồ 1,38 Từ Liêm 22,54 Hà Đông 23,01 No Districts/Rural districts 14 Hoàng Mai Transaction volume ratio (%) 6,88 10 Thanh Trì 1,42 11 Long Biên 5,03 12 Đan Phượng 2,79 13 Các quận/huyện khác Total 0,63 100 No Districts/Rural districts Source: Data retrieved by NCS from the reports of the Institute of construction economics sciences as of 2013 Combining these findings with the ones of other studies of the influencing factors, the REM of Hanoi city can be divided into areas in order to establish the REM index as follows: Table 2.5 Subdivisions of Hanoi Hanoi city Region Region Region Region Hoàn Kiếm Tây Hồ Nam Từ Liêm Long Biên Ba Đình Cầu Giấy Bắc Từ Liêm Thanh Trì Đống Đa Thanh Xuân Hồng Mai Hai Bà Trưng Hà Đơng Source: Data retrieved and processed by NCS Step 2: Collect the original data: the original data (1 quarter of 2011) in terms of the transaction values and transaction volumes of the representative apartments are based on the secondary data provided by the state authorities in charge of the REM of Hanoi City and the data of certain reports, researchs related to the establishment of the REM index Step 3: Collect the reference data: The reference data related to the apartment price index and the transaction volume index at the time of calculation are based on the secondary data collected from the data sources likely to the ones storing the original data In addition, the autor has conducted the surveys with the samples selected randomly in 13 administrative areas of Hanoi city and show the results in this study Step 4: Calculate the index: The apartment price index in Hanoi City can be calculated according to the following model: 15 Data related to the apartment prices in the reference period Data related to the apartment prices in the of high-end initial period apartment Price index Price index of midrange Price index of low-end apartment apartment Price index Price index Price index Price index of the of the of the of the apartments apartments apartments in apartments in the region in the region the region in the region n Apartment price index of Hanoi City Source: Data collected by NCS Diagram 2.2 Model determining the apartment price index of Hanoi City 2.4.4 The results determining Hanoi REM index The calculation results of the apartment price index and apartment transaction volume index in percentage can be synthetized and shown in the below table: Table 2.6 Apartment price index of Hanoi city Category Q1 2012 Q2 Q3 Q4 Q1 2013 Q2 Q3 Q4 Q1 Unit: % 2014 Q2 Q3 Q4 Apartment price index of different types of 86,32 81,05 80,13 78,15 75,97 73,58 72,30 71,84 72,55 73,07 74,53 75,22 apartments + High-end apartment 86,57 81,79 80,68 80,68 79,58 78,91 77,05 76,68 78,57 79,47 81,06 81,81 + Mid-range apartment 85,42 80,84 80,05 77,88 75,64 73,04 71,81 71,36 71,91 72,42 73,87 74,55 + Low-end apartment 87,52 83,30 80,39 77,40 74,08 71,82 71,07 70,11 71,53 71,33 72,76 73,43 Source: Data processed by NCS 16 Source: Data processed by NCS Graphic 2.5 Apartment transaction price index of Hanoi city Source: Data processed by NCS 17 Graphic 2.6 Apartment transaction price index of Hanoi city Source: Data processed by NCS Graphic 2.7 Apartment transaction volume index of Hanoi City 2.4.5 Analysis of Hanoi REM evolution by using the determined index The apartment price index and the apartment transaction volume index of Hanoi City pursuant the calculation results reflect the evolution of Hanoi REM in the reference period Accordingly, although the real estate transaction doesn’t see any big changes, the transactions of certain types of real estate, including the small and cheap apartments tend to fluctuate sharply 2.4.6 Some findings found out from the calculation results of Hanoi REM index 2.4.6.1 The achievements: The determined index reflect some factors which influence directly the index calculation process The determined index have proven the suitability of the solutions to the improvement of the method specified by the Ministry of Construction 2.4.6.2 The difficulties to be faced: Besides the achievements, the calculation of the REM index of Hanoi City has raised some difficulties such as: difficulty in collecting information, data; difficulty in valuation of real estate transactions; difficulty in organizing the human resources; difficulty in allocating the examining areas; The uses of the index to assess the situation and to forecast the development of the REM require further studies; Determining the REM index in a efficient manner requires the fulfillment of some conditions 18 CHAPTER ORIENTATIONS AND SOLUTIONS TO THE COMPLETION OF VIETNAM’S REM INDEX UNTIL 2020 3.1 Contexts of completing Vietnam’s REM index until 2020 3.1.1 International context 3.1.1.1 The trend of restructuring the global economy associated with the growth patterns: Some trends of restructuring of the global economy: easing of the monetary policy; promoting trade liberalization; stimulating the domestic demand In this context, Vietnam needs to have the solutions to the management of all aspects of the economy to deeper intergrate into the global economy This can be considered as a pressure influencing directly the role of markets mangement in the economy of Vietnam The necessary solutions also include the measures to boost the healthy development of the REM 3.1.1.2 The development trends of the global REM in the years to come: The development of the global REM depends the development trends of the global economy Facing the economic downturn, the global REM will see some big changes in the years to come This context gives the opportunities to attrach more investments in Vietnam’s REM This effect requires Vietnam of further improvements of the legal framework, enhancement of the management efficiency in order to attract more foreign investments, including the increase of investment in the REM 3.1.1.3 Boom of the application of scientific achievements of modern technology: By 2020, the boom of the development of modern science and technology will continue to make new progress The information system of the REM will boom thanks to digital applications and automation The information systems of the REM between different countries will be linked more closely 3.1.2 Domestic Context 3.1.2.1 Prospects of the economy of Vietnam until 2020: as of 2015, along with the effective solutions, a number of opportunities will araise in the years to come The economy of Vietnam will have great chances and operating resources The economic prospects by 2020 and later on have not only created the opportunities for the REM, but also posed the challenges for the management of the REM 3.1.2.2 Development trends of Vietnam’s REM by 2020 and in the years to come: Along with the development of the institutional system, the continuous improvement of the socialist-oriented market economy, the legal framework will allow Vietnam’s REM to 19 be further completed 3.2 Advantages, disadvantages and requirements to establish Vietnam’s REM index until 2020 3.2.1 Advantages and prospects Vietnam’s REM is showing signs of recovery and growth prospects in the coming period By 2020 and the years to come, Vietnam’s REM will develop to meet the requirements for an effective integration into the global economy The experiences of the state management of REM and information system of REM will continue to be gained Practicing the experiences of the advanced countries in developping the information system of REM is a helpful lesson which allows us to complete the calculation method and efficient establishment of Vietnam’s REM index 3.2.2 Difficulties and challenges The economy of Vietnam is still in the growth phase, but at a slower space than before The per capita income has been improved But the income of a large portion of certain groups such as officers, employees, civil servants, workers, laborers who are not permanent employed, are likely not able to affort a housing Despite the initial orientations of information gathering, data which serve the establishment and publishment of REM index, this task remain challenged and uneasy to fulfill The lack of experiences in issuing the regulations related to the methods of determining, the responsibility for the organizing of the establishment of the index is also a challenge which could effect the success of the establishment of Vietnam’s REM index 3.2.3 Requirements for the completion of the establishment of Vietnam’s REM index by 2020 and the years to come The establishment of Vietnam’s REM index must fulfill certain requirements, in which the support of the macroeconomic management and the transparentizing of the REM information are the basic ones 3.3 The point of view, the orientation of the completion of the establishment of Vietnam’s REM index until 2020 3.3.1 Point of view of the completion of the establishment of Vietnam’s REM index until 2020 The completion of the etablishment of the REM index can be realized based on a number of point of view: being consistent with the pratice of Vietnam’s REM; establishing the coincident indicators measuring the REM in an appropriate manner; inheriting the methods applied broadly in the world and the ones applied in the recent 20 years by upgrading them and providing the information to the parties related to the development of the REM 3.3.2 The orientation of the completion of the establishment of Vietnam’s REM index until 2020 3.3.2.1 Select the level of REM index: The selection of a number of REM subindex which have the synthesized characteristics such as real estate price index, transaction volume index, rent index, office leasing index, business premise leasing index for the establishment of the REM index is suitable for the implementing and consistent with the pratices of Vietnam’s REM 3.3.2.2 Select the method of determining the REM index: keep completing the methods of determining the REM index prescribed by the State Thanks to that, this method can be summerized, evaluated and expended the scope of application on a national scale 3.3.2.3 Select the scope and frequency of the REM index: For Vietnam, due to various influencing factors, the REM index coverage to be determined in one city is suitable After the test phase, the method of determining this index will be expended on a national scale The frequency of REM index publishment should be quarterly 3.3.2.4 Choose the way of collecting data and calculating the REM index: Organizing the way of collecting data and calculating the REM index will be conducted by hiring the consultancy organisations In addition, a legal basis has to be established in order to enforce the legal framework for the information system of the REM 3.4 The solutions to the improvement of establishment of Vietnam’s REM index until 2020 3.4.1 The solutions to the guarantee of the health of REM associated with the improvement of the transparency of the information system of REM 3.4.1.1 Transparency of the information of real estate status quo: Accordingly, keep completing the database system for the consistent management on a national scale; allocate the resources to complete the procedure of issuing the certificates of land use rights and house ownership By doing that, the legal basis will be created so that the real estate products can be circulated on the market The buyer and seller will be in turn willing to register the real estate transactions with the authorities 3.4.1.2 Transparency of the information related to the development of real estate: Accordingly, it is needed to publish the information related to the planning, the implementation of the housing development projects, real estate projects; renewal of the land use planning and urban construction planning; keep improving the regulations related to the primary REM 21 3.4.1.3 Transparency of the information of the real estate transactions: taking compulsory measures so that the payment of the real estate transactions have to be effected with a bank; renewal of the mortgage and settlement mechanism to call for the participance in the REM; research and complete the tax, fees and expenses policies related to the management and transaction of REM 3.4.1.4 Transparency of the information related to the real estate credit: it is needed to publish the real estate customers who raise loans at the financial institutions and other institutions having banking operations The statistics on real estate credit should be publicized, transparent and accessible 3.4.1.5 Establish an early warning system for the REM: it is necessary to establish a system to forecast the trends, the development possibility in the furture In order to deploy this solution, it is required to create a support center providing the financial information for the REM and to set up the criteria evaluating the level of risk of the REM 3.4.1.6 Establish the information system of the REM: it is necessary to establish and manage consistently the information system of the REM A complete information system of the REM shall include: database of the REM and the technical and information infrastructure and the softwares which enable the management and provision of information In order to use and exploit the information system of the REM in an efficient manner, the management model of the information system of the REM must be established consistently, including central and local levels 3.4.2 The solutions to the completion of determining techniques of REM index 3.4.2.1Choose the level and type of REM index: the level and type of Vietnam’s REM index in the future will be the subindex of the REM index on a small scale (REMI index), namely the real estate price index and real estate transaction volume index Publicizing the REM index quarterly is the most appropriate 3.4.2.2 Select the coverage and frequency of the REM index: the coverage of the selected indicator is the index for specific urban Publicizing the REM index quarterly is the most appropriate 3.4.2.3 Complete the methods of determining the REM index: methods of determing the REM index were selected as per prescribed by the Ministry of Construction Accordingly, keep using the method of combination-adjusted method prescribed by the Ministry of Construction to calculate the REM index over the periods 3.4.2.4 Strengthen the regulations on the establishment of the REM index: the 22 establishment of the REM index must be considered as annual tasks, objectives and as a criteria to evaluate the degree of task accomplishment of the authorities, entities Complete the regulations in order to provide information, data for the support of the establishment of the REM index 3.4.3 Solutions to the development of the resource human who establish the REM index 3.4.3.1 Train, foster, improve the professional niveau of the staff, state officers who work in the REM: it is necessary to evaluate the qualifications, the capacity of the staff for the suitable tasks Thanks to this, train and improve the professional niveau of the staff The training centers have to develop the teaching materials suitable for the actual requirements and qualifications of the staff 3.4.3.2 Train, foster the professional level related to the real estate business, especially the brokerage knowledge It is necessary to improve the content, the quality of education at the undergraduate and graduate level in the field of real estate and REM The system of the training institutions, professional training program need to be improved the teaching materials and methods 3.4.3.3 Professional training related to the establishment and management of information of the REM: concentrate on providing the information related to the contents, nature of the database of REM; skills of collecting information, data and updating; using skill of the softwares supporting the management of information, data 3.4.3.4 Professional training related to the establishment of the REM index: it is necessary to train the professional knowledge and skill which support the determination of index, including real estate valuation 3.5 Conditions to ensure the implementations of the recommendations of establishment of Vietnam’s REM index 3.5.1 Grasp thoroughly the perceptions, thoughts The state bodies are required to have a consistent perceptions, thoughs related to the REM; the role and significance of the REM index 3.5.2 Recommendations of policy issuance The Government and the Ministry of Construction need to research the legislative documents which provide the information of the REM The state has to study and issue the Circular related to the establishment and management of the information system of the REM The Ministry of Construction need to study and issue the legislative documents to amend and improve the limitations and complete the necessary regulations 23 related to the establishment of the REM index 3.5.3 The recommendations related to the implementation conditions First off, the State has to allocate capital to invest in the technical infrastructure, information, softwares and train the cadres, exploit the information system of the REM People’s Committee of provinces and cities need to allocate the local capital to establish the local REM index Another important condition is to establish the organisation to carry out the establishment of the REM index 24 CONCLUSION AND RECOMMENDATIONS The volatility of the REM has affected many aspects of socio-economic Hence, the measurement, evaluation and forecast of the volatility of the REM is an important task in order to implement the policies of macroeconomic stability and the policies of promotion of the socio-economic development The dissertation "Study and establish the REM index (applicable to Hanoi city)" has achieved the purposes of study, theoretical and practical approaches, namely: Systematized the approaches related to the content, nature of the REM index and the methods of determining these index Figure out the essentiality of completion of the methods of determining; figure out the procedure of establishment of the REM index Analyzing and evaluating the status quo of the management of information of the REM has found out the limitations and their causes in establishing the REM index; thanks to this, this study has figured out the contents to be completed in establishing the REM index Determine the orientation and recommend the main solutions to the completion of the establishment of Vietnam’s REM index until 2020 and the years to come Due to lack of experiences and resources, this study is not able to encompass all the issues related to the establishment of the REM index Therefore, the autor recommend to research further as follow: - Keep improving methods of determining the REM index which has synthetized characteristics on a small scale (REMI index); - Study the necessary conditions to apply the methods of determining the REM index by using econometric models; - Methods of calculating the index in other locations which has lower development level; - Study the methods of application of the index to analyze, evaluate quantitatively the evolution of the REM and to forecast the development trends in the future, especially in the near future - Keep implementing the applying of the REM index for other urbans in order to summerize, evaluate and apply for other locations The author would like to receive comments of scientists, managers, teachers, colleagues and readers in order to complete the contents of this study Thank you very much! ... value of the real estate once being considered as a product on the market 1.1.2 Overview of the real estate market 1.1.2.1 The concepts of real estate market: real estate market is a combination of. .. Influencing factors of the determination of the REM index The transparency of the REM Indire ct factor The role of the state administration vis-à-vis the information system of the REM REM index s Mindset,... 11 b) The range of the determined index is not consistent with the actual development of the market: the way of determining the market area in the course of the calculation of the REM index doesn’t