"If we cannot solve the low-cost housing segment, real estate will still be difficult"

The market is still difficult for a long time.

Speaking at the Forum on Sustainable Development of the Real Estate Market organized by the Business Forum Magazine on September 22, Mr. Nguyen Quoc Hiep, Chairman of the Vietnam Association of Construction Contractors, said that the real estate market has many problems, especially in terms of law, accounting for 70%.

He pointed out the first problem is the overlap of laws. Real estate alone has about 12 laws that directly affect it; and there are up to 20 related laws such as: Planning Law, Construction Law, Housing Law, Fire Prevention and Fighting Law, etc.

"How to resolve the "disease" of overlapping laws? Currently, the mechanism is that ministries and sectors draft their own laws, but there is no consensus. Along with that, the reception of comments during the law-making process is still limited," said Mr. Hiep.

According to Mr. Hiep, the real estate market is facing four major problems. These are land clearance; planning; land valuation; and land use conversion. The solution to these problems needs to focus on these issues.

Besides, the problem of administrative procedures is also one of the obstacles, causing difficulties for businesses.

Mr. Hiep said that through research with foreign investment enterprises, they assessed that Vietnam's real estate has great potential but were afraid of the procedures.

“I am glad that the Ministry of Construction is preparing to issue legal procedures for real estate projects,” said Mr. Hiep.

Dr. Le Xuan Nghia, member of the National Financial and Monetary Policy Advisory Council, said that real estate is a long-term essential product. Therefore, when there is an imbalance between supply and demand, a crisis will occur.

If the last time there was a supply surplus, this time there is a supply shortage. Both lack of supply and lack of demand lead to loss of confidence. At that time, banks did not dare to lend, the government did not dare to grant more projects. Enterprises did not dare to do more projects… the market fell into a “frozen” state.

“We have been monitoring the past few months to see if market confidence has returned by monitoring some large real estate corporations issuing bonds. Recently, the largest real estate corporation did not owe a single bond. The corporation’s bond payments were very good, with an issuance interest rate of 15%, the highest in the market. After about 3 months of monitoring… the numbers show that the market is only “struggling” to recover about 30% compared to expectations,” said Mr. Nghia.

The expert said that the difficult real estate market will last until the second and third quarters of next year.

Solution to the problem

According to Dr. Le Xuan Nghia, recently the Government has taken drastic measures to solve the real estate market, but the results have not been high.

“We cannot solve the low-cost housing segment. Focusing all our efforts on it is not solving the “eye of the storm”. That is, if we cannot speed up the supply of low-cost housing, we will not solve the problem.

How can businesses that build low-cost housing still be “free”? We control profits, have to sell to the right target… while land allocation is difficult, procedures are complicated, making low-cost housing developers discouraged. Whether building low-cost housing or high-end housing, whoever does it, the profit must be the same,” said Mr. Nghia.

From the perspective of the management agency, Mr. Hoang Hai, Director of the Department of Housing and Real Estate Market Management (Ministry of Construction) said that recently, the Prime Minister has taken many drastic actions to remove difficulties for the real estate sector.

Accordingly, the Government has issued Resolution No. 33 on a number of solutions to remove obstacles and promote the safe, healthy and sustainable development of the real estate market...

The Prime Minister has also established a Working Group to resolve difficulties and issued many dispatches directing ministries, branches and localities to implement short-term and long-term solutions to remove difficulties and promote the real estate market.

“After Resolution 33 came into effect, there were initial results, many difficulties related to laws and institutions were resolved. The implementation of Resolution 33 has “removed” the market’s fear and loss of confidence,” said Mr. Hai.

However, the Director said that in the coming time, ministries, branches and localities still need to focus on reviewing and removing procedural obstacles to complete investment preparation and select investors to implement commercial housing and social housing projects, etc. to increase housing supply.

Along with that, organize appraisal and approval of planning and land use plans; ensure adequate land fund for developing social housing, workers' housing, etc.