Overcoming the "paradox" and solving the "price inflation" situation of the real estate market

The above is the request of Deputy Prime Minister Tran Hong Ha at the online meeting of the Prime Minister's Working Group on reviewing, urging, and guiding the removal of difficulties and obstacles in the implementation of real estate projects for localities and enterprises after the promulgation of new laws (Land Law (amended), Housing Law (amended), Real Estate Business Law (amended), on the morning of March 11, at the Government Headquarters.

Overcoming the "paradox"

Considering that the difficulties and obstacles of the real estate market have seriously affected the economic ecosystem, especially the banking, construction, construction material production, consumer goods, etc. sectors, Deputy Prime Minister Tran Hong Ha stated that the Government and the Prime Minister have paid attention and directed, held many meetings and forums to record comments and find solutions to the real estate market. The Government and the National Assembly have urgently revised relevant laws and prepared to issue documents guiding the law. Along with the contributions of businesses and associations, the real estate market has shown signs of "warming up" and becoming more positive.

Regarding difficulties and problems related to credit, planning, legal status, real estate business activities, etc., leaders of ministries, branches, localities, associations, and enterprises need to carefully evaluate the effectiveness of the implementation of mechanisms, policies, and laws.

"The State will do its utmost, with great determination, and make great efforts to fulfill its responsibilities and authority. However, investors and real estate businesses must recognize their responsibility in overcoming the "paradox" of excess high-end segments and lack of affordable segments, and resolving the situation of 'price inflation' and 'price pushing'... There needs to be a clear, impartial, objective, and non-evasive viewpoint in order to bring the real estate market back to normal operations," the Deputy Prime Minister stated.

Emphasizing the development of a healthy real estate market, the Deputy Prime Minister requested the Ministry of Construction to summarize the main problems that can be solved in the recently passed amended and supplemented laws on land, housing, real estate business, etc.; from there, advise and submit to the Government and the National Assembly to issue documents within their authority to allow application before the law takes effect.

The working group must compile statistics on the number of real estate projects that have been allocated land but are facing procedural difficulties; develop criteria for qualified real estate investors; summarize and codify the pilot project allowing localities to locally adjust planning for projects without reducing targets. In addition, the working group must expand the scope of social housing access for low- and middle-income earners and enterprises in industrial parks; provide full guidance for localities to implement existing mechanisms and policies on land recovery, site clearance, resettlement, land valuation, etc.

The Deputy Prime Minister requested that in order to resolve the recommendations of enterprises and localities, it is necessary to specifically determine the responsibilities and completion time of each ministry and sector. At the same time, localities must specifically calculate the needs of the people, fully allocate land funds for housing projects, and renovate old apartments during the process of making and implementing urban and rural planning; and report on the activities of local working groups in removing difficulties and obstacles in implementing real estate projects.

Regarding capital sources for social housing projects, the State Bank of Vietnam and the Ministry of Finance will study fiscal policies to support interest rates for preferential credit loans for businesses and people; establish a social housing investment fund including the state budget, contributions from businesses from the 20% cost of building social housing in commercial housing projects and other legal sources.

The Deputy Prime Minister hopes that businesses and investors will calculate reasonable costs, offer commercial and social housing products at suitable prices, ensure product design quality, aesthetics and reasonable profit margins, and harmonize the interests of the state and the people.

Create conditions for "demand to reach supply"

According to the Ministry of Construction, the real estate market in general and the removal of difficulties in implementing real estate projects have had many positive changes.

Typically, Hanoi currently has 404 projects; after reviewing and classifying difficulties and obstacles, they have been resolved: 81 projects have been removed from the list of slow-to-implement projects; 10 projects have had their land reclaimed and operations terminated; 67 projects continue to urge investors to speed up implementation progress. Hanoi is continuing to implement the removal of difficulties and obstacles for 246 projects according to the instructions of the Ministry of Construction and ministries and branches. Similarly, Ho Chi Minh City has implemented the resolution: according to its authority, 33/72 projects requested by the Working Group; 44/148 projects proposed by the City Real Estate Association; and is continuing to implement the removal of difficulties and obstacles for 143 projects...

Many institutional difficulties and problems have been resolved by new laws on housing, real estate business, land, etc., but they have not yet come into effect, leading to the current difficulties and problems not being resolved immediately. Some localities have not yet established working groups and have not yet resolved difficulties; there are still many problems in organizing and implementing law enforcement; there has not been a focus on establishing and approving planning, land use plans, construction plans, 5-year and annual housing development programs and plans to serve as a basis for approving investment policies for housing development projects; there has not been a push to implement land use rights auctions, bidding for projects using land, etc.; administrative procedure reform is slow...

Stating that the banking sector strictly controls credit in risky areas, Deputy Governor of the State Bank Dao Minh Tu shared that for the real estate sector, the main risks are speculation and price inflation, making it difficult to sell products, unable to circulate capital flows, and difficult to recover debts. Therefore, in recent years, together with the Ministry of Construction, ministries, associations, and local authorities, the State Bank of Vietnam has wanted to remove obstacles for the real estate sector, especially in terms of credit mechanisms to extend and postpone debts...

Reporting on some problems in the 120 trillion VND social housing loan package, Mr. Dao Minh Tu said that the key issue is to create conditions for "demand to reach supply" and boost supply; on that basis, reduce the objective price of the market on the supply-demand relationship as well as with projects, corporations that push up prices, monopolize and speculate in real estate.

At the meeting, representatives of associations, real estate businesses, and banks focused on discussing solutions to determine reasonable prices for high-end commercial housing; and assessing the real estate market for customers with low and middle incomes.

Notably, regarding the development of the social housing market, representatives of some banks said that the difficulty in disbursing this credit package is the investor's ability to meet the financial capacity, collateral, project liquidity, and the limit on the profit margin of social housing projects... Some businesses proposed shortening the time for reviewing the legality and origin of land use of social housing projects; simplifying administrative procedures and processes; loosening credit access conditions for investors and buyers with low and middle incomes...

Leaders of several ministries and branches have discussed and clarified recommendations from businesses and localities on land valuation, legal procedures in land allocation, land use rights auctions, etc., with the determination to resolve problems within their authority, continue to improve mechanisms and policies but "not legalize violations".