Market’s SOS call is answered

An oversupply of housing has been blamed for over 20,000 unsold apartments in the two cities despite two years of plummeting property prices.  The paralyzed market has contributed to the troubles in the banking system and the construction industry.

Dung pointed out that weakness in management and planning was a major reason leading to difficulties of the real estate market and he  called on Hanoi and Ho Chi Minh City officials to review the planning of housing market towards developing social houses, houses for workers, students and civil servants.

He also said the two cities need to create financial institutions to support the market and stimulate the market demand, ensuring that low-income people can afford houses at reasonable prices.

The State Bank, besides focusing on dealing with bad debt, was required to study and map out feasible policies to provide loans for people to buy social houses.

Nguyen Huu Tin, deputy chairman of Ho Chi Minh City People’s Committee  asked the government to form a national steering committee to carry out comprehensive research on problems facing the real estate market including bad debts with a view to addressing current problems and developing long-term strategies.

Tin also asked the State Bank to support investors and offer credit to consumers to buy properties.

According to Tran Du Lich, a deputy from National Assembly, the difficulties of the real estate market should be addressed systematically.

State Bank governor Nguyen Van Binh said commercial banks could earmark VND20,000-40,000 billion ($959 million-$1.9 billion)   for lending house purchases in the duration of 10 years.

Meanwhile, Minister of Finance Vuong Dinh Hue said that land use and leasing taxes will be extended for projects’ investors, as well as the reducing of other taxes such as corporate income tax and VAT is being considered.

The prime minister ordered the two cities to halt projects that are not part of approved plans, have not finished site clearance.

Dung also said these issues would be discussed further at the monthly working session of the government  this month towards issuing a resolution for dealing with problems in the real estate market.

According to the Ministry of Construction and the two cities’ people committees, the real estate market crisis has affected production and trade in other sectors, including cement, steel and other construction materials.

Many investors who entered the construction boom lacked financial capacity and professional knowledge of real estate projects.

According to Hanoi People’s Committee, about 5,800 apartments remained unsold and 175,000 square meters of office vacant, while the figures in Ho Chi Minh City are 15,000 apartments and 60,000 square meters of office.