Developing a safe and healthy real estate market

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A view of the conference.

The supply of commercial housing has not improved

Minister of Construction Nguyen Thanh Nghi reported on the comprehensive assessment of the real estate market in 2021 and the first six months of 2022; forecasting the situation and proposing solutions to develop a safe, healthy and sustainable real estate market.

According to the Minister, in 2021 and the first six months of 2022, the real estate market has been facing many difficulties due to the impact of the pandemic, it has adapted and gradually undergone many changes.

In 2021, there were 172 commercial housing projects completed with a scale of 24,027 units, equal to about 42% of the number compared to 2020.

In the first six months of 2022, the number of completed commercial housing projects is limited to about 12,000 units, equivalent to the same period in 2021, showing no improvement in commercial housing supply.

Regarding social housing, the Minister said that the total number of completed social housing projects is 279, the construction scale is about 148,000 units, and the total area is more than 7.4 million m2.

Currently, 355 projects are continuing to be implemented across the country, with a construction scale of about 377,000 units, and a total area of ​​​​about 18.84 million m2.

In the first six months of 2022, the whole country completed only three social housing projects for low-income people in urban areas and industrial park workers, the construction scale is about 6,000 units, and the total area is about 300,000 m2 of floor.

According to the Minister's assessment, the results of the development of social housing projects and housing for workers in 2021 and the first six months of 2022 are very limited compared to the demand.

In terms of real estate transactions, in 2021, there will be about 110,000 transactions of apartments and individual houses in projects (nearly equivalent to about 115,000 transactions in 2020).

Meanwhile, the volume of land plot transactions increased sharply, the total number of land transactions in the year was about 170,000.

In the first six months of 2022, the total number of transactions increased sharply compared to the same period in 2021. Accordingly, transactions of apartments and individual houses were about 50,000, land plots about 200,000.

Regarding prices, in the first six months of 2022, the price of apartments, individual houses, and land plots still increased compared to the end of 2021, the price increase of real estate segments concentrated at the end of the first quarter, slowed down and showed signs of slowing down in the second quarter.

A series of inadequacies

At the conference, the Minister highlighted the limitations and inadequacies of the real estate market, as well as signs of instability.

The legal system related to investment, construction, and real estate business has some shortcomings that need to be studied and revised. This resulted in a decrease in the supply of commercial housing in most localities.

Real estate prices, especially housing and residential land, are constantly increasing and are higher than people's incomes, making low-income workers in urban areas and industrial parks face difficulties in accessing and creating accommodation.

At the conference, reporting on credit policies contributing to the development of a safe, healthy and sustainable real estate market, Governor of the State Bank of Vietnam Nguyen Thi Hong said as of May 31, 2022, outstanding credit for the real estate sector was VND2.33 quadrillion, up 12.31% compared to the end of last year.

This is a high increase compared to the same period in previous years and higher than the overall credit growth rate, accounting for 20.66% of the total credit outstanding to the economy.

Along with the implementation of credit for the real estate sector from depositors' mobilized capital, over the years, the system of credit institutions has implemented a number of programs for housing under the direction of the Government, the Prime Minister may apply specific regulations on subjects and conditions for borrowing capital and interest rates.

According to the Governor, the demand for real estate credit is usually with medium and long-term terms (currently about 94% of outstanding loans have a period of 10-25 years), while the bank's mobilized capital is mainly short-term with interest rates that vary according to the market (about 80% are short-term deposits).

Therefore, if the term balance between mobilization and lending is not appropriate, credit institutions may face liquidity risk and fail to meet the demand for a deposit to the people.

As a management agency, the State Bank has issued a full legal framework for credit institutions to perform the role of lending, buying bonds, guaranteeing, including lending to the real estate sector, buying bonds of real estate enterprises, and regulations on guarantee activities in the sale, lease-purchase of houses formed in the future.

In order to contribute to promoting the real estate market, the representative of the State Bank proposed many solutions, in which, to transparently disclose information about construction planning, list, and progress of development projects infrastructure, local real estate projects, preventing rumors and speculation; reviewing and completing regulations related to securities and corporate bonds, establishing reputable credit rating companies, and improving transparency in capital mobilization activities on the stock market.

Determining to develop a safe real estate market

Speaking at the conclusion of the conference, Prime Minister Pham Minh Chinh emphasized the point of persistence, steadfastness and resoluteness in developing a safe, healthy and sustainable real estate ecosystem; not tighten credit unreasonably, but strengthen inspection and supervision, not relax state management.

Along with that, do not criminalize civil-economic relations, but review, prevent and detect violations to strictly handle them in accordance with the provisions of the law, protect the people who do the right thing, and protect and harmonize the interests of the state, people and businesses.

Regarding capital for real estate, the Prime Minister also assigned the Ministry of Finance to assume the prime responsibility for, and coordinate with ministries and sectors in, urgently finalizing the draft and submitting it to the Government for amendments to Decree 153/2020/ND-CP dated 31 December 2020 on offering and trading corporate bonds in the domestic market and offering corporate bonds to the international market.

At the same time, control capital mobilization activities of real estate businesses on the stock market to avoid speculation and manipulation.

Along with that, inspect and supervise the compliance with the law on the issuance and use of capital obtained from the issuance of bonds, especially the private placement of bonds by real estate enterprises and credit institutions related to real estate enterprises, enterprises with large issuance volume, high interest rates, enterprises with loss-making business results, and enterprises issuing unsecured assets.