Government takes action, businesses "hold on"!

The Ho Chi Minh City Real Estate Association has just made a remarkable move when it issued a document requesting real estate corporations and businesses to implement the Prime Minister's directive to restructure the market segment and reduce housing prices to suit people's incomes in order to join hands to remove difficulties for the real estate market to develop safely, healthily and sustainably.

One of the reasons given by this Association is that recently the Government, the Prime Minister and local authorities have actively taken actions to remove difficulties for the market, but businesses are still "inactive" in restructuring products and adjusting appropriate selling prices.

According to the Ho Chi Minh City Real Estate Association, in the 11 months of 2023, the Prime Minister chaired two conferences to discuss solutions to remove difficulties for the market, businesses, home buyers, and investors. The Prime Minister also chaired a thematic conference on implementing the Program to develop at least 1 million social housing units in the 2021-2030 period. The Government's Working Group and the Prime Minister's Working Group have closely coordinated with ministries, branches, and localities to review and remove obstacles and difficulties for hundreds of real estate projects, typically Ho Chi Minh City.

On the local side, Ms. Le Thi Huynh Mai, Director of the Department of Planning and Investment of Ho Chi Minh City, said that in order to remove difficulties related to commercial housing projects, at the end of 2022, the City People's Committee had compiled and reviewed difficulties in the fields of investment, planning, land, housing, construction, and real estate business, to report to the Government's Working Group on reviewing and guiding the removal of difficulties in the implementation of real estate projects. At the same time, the City People's Committee also held a meeting to provide direction for removing difficulties for 16/32 projects transferred by the Working Group. For the remaining 16/32 projects, the City People's Committee assigned departments, branches, and sectors to continue reviewing the legality to synthesize and report to the City People's Committee for consideration and resolution of each specific case.

In addition, from 189 petitions of 148 projects compiled by the City Real Estate Association, up to now, the city's departments and branches have resolved 43 petitions of 39 projects. "Currently, the city is focusing on resolving 71 petitions of 48 projects related to investment and construction procedures. For 30 petitions of 30 projects related to the issuance of certificates of land use rights, house ownership rights and other assets attached to land, the city has assigned the Department of Natural Resources and Environment to continue reviewing and speeding up the resolution process," said Ms. Le Thi Huynh Mai.

Thus, it can be said that from the perspective of State management, almost all recommendations and proposals of the Association and the real estate business community have been listened to, considered and resolved by competent authorities at different levels. However, on the side of real estate businesses, the reception and implementation of the Prime Minister's directive on the requirement to "restructure segments and reduce product prices" has so far "not been actively implemented" as commented by the Prime Minister. The Prime Minister's question about the responsibility of real estate businesses is that while the current real estate market situation is still difficult, they still want to keep the selling price the same, still demand "one-way", is there a common responsibility?

From the above reality, Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, said that the Prime Minister's question about the responsibility of real estate enterprises needs to be answered immediately by real estate corporations and enterprises with specific actions in restructuring housing products towards real needs and reducing housing prices in accordance with people's incomes to join hands to remove difficulties for the real estate market to develop safely, healthily and sustainably.

Analyzing some of the "inadequacies" of the current real estate market, a representative of the Ho Chi Minh City Real Estate Association said that the number of businesses with housing products brought to the market in the past 3 years is not much. In Ho Chi Minh City, in 2021 there were only 20 businesses, in 2022 there were only 25 businesses. In the first 9 months of 2023 alone, only 13 businesses had products brought to the market with a total of 15,020 apartments, of which 9,969 were luxury apartments accounting for 66.37%, the remaining 5,051 were mid-range apartments and there were no affordable apartments suitable for people's income. In general, the number of housing projects and products launched to the market from 2020 to present has decreased significantly compared to 2017 - the year of highest growth in the past 10 years when 92 projects with 42,991 apartments were launched to the market.

On the other hand, the Ho Chi Minh City Real Estate Association analyzed that in recent years, due to "legal problems", there has been a shortage of housing project supply, leading to the phenomenon that some "lucky" housing projects have been approved and implemented, but in some cases, the project with the original target of being an affordable housing project or a mid-range housing project has been "renovated" by the investor, transformed into a housing project with a higher "label", even "inflated" as high-end housing to "maximize profits", so the real estate market is completely lacking in affordable housing suitable for people's income. At the same time, the market is also very short of social housing because the investment in the construction of social housing projects also encounters "legal problems", and the investment procedures for the construction of social housing projects are even more difficult than commercial housing projects.

Regarding selling prices, according to the records of leading real estate market research companies in Vietnam today, the apartment and townhouse market has had almost no price adjustments in recent times, but many more attractive sales policies have been introduced to stimulate market demand during this difficult period. Specifically, some preferential sales policies include but are not limited to extending payment schedules with multiple payments and lower payment amounts per installment, higher discounts for early payments, interest rate support programs, free management fees and other special service packages.

Faced with the above situation, the Ho Chi Minh City Real Estate Association recommends that real estate corporations and businesses reduce housing product prices, reduce profit expectations, not "anchor high prices", increase discounts and have promotional and after-sales policies to stimulate consumer demand in the real estate market to increase "market confidence", create cash flow and liquidity for businesses.

In the long term, real estate corporations and businesses need to shift their investment to the affordable housing segment that is suitable for people's income and participate in the implementation of the "Program to develop at least 1 million social housing apartments in the period 2021-2030" to be able to access the VND 120,000 billion credit package with interest rates 1.5-2% lower than normal commercial interest rates, especially for real estate corporations and businesses that have registered to participate in this program.

At the same time, real estate corporations and businesses participate in programs to rebuild old apartment buildings, programs to renovate and relocate houses on and along canals, programs to renovate and redevelop old, dilapidated urban areas in localities, especially in centrally-run cities.

On the part of competent state agencies, the Ho Chi Minh City Real Estate Association recommends continuing to focus on removing "legal obstacles" to increase the supply of housing projects on the market, creating a basis for increasing the supply of affordable housing and social housing, thereby "stabilizing" housing prices according to the law of supply and demand and the law of market competition. The Ministry of Construction should soon submit to the Government detailed regulations on "stages of housing construction investment projects" as prescribed in Article 34 of the 2023 Housing Law, to "standardize" the process and administrative procedures for reviewing and approving commercial housing projects and social housing projects to shorten the time for implementing investment procedures using land.

It can be said that, in the context of the general difficulties of the socio-economic development situation in general, and the real estate sector in particular, the Government, the Prime Minister and ministries, branches and localities have actively sought solutions to remove difficulties for businesses and investors. However, businesses and investors also need to be more proactive, positive and flexible in their operational strategies, all with the "spirit of sharing hardships, harmonizing benefits, sharing risks" as Prime Minister Pham Minh Chinh mentioned many times in conferences, dialogues and instructions related to business activities in recent times. Efforts are needed from both sides, as the saying goes "two hands clap to make a sound" to overcome difficulties, towards sustainable development of the economy.