Real estate policy repair encouraged

August 14, 2023 | 09:00
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More effective solutions are being called for to pave the way for new supply and access to buy property.
Real estate policy repair encouraged
Real estate policy repair encouraged, photo Le Toan

The government on August 7 issued Resolution No.124/NQ-CP, which requires related ministries and sectors to accelerate the establishment of trading real estate centres to help make the market more transparent.

According to the resolution, the government requires the Ministry of Construction to work with localities and businesses to push up implementation of large-scale and long-delayed real estate projects.

The move followed hot on the heels of discussions on solving issues in the real estate market at a conference between local authorities and property businesses, chaired by Prime Minister Pham Minh Chinh days previously.

The working group, led by Deputy Minister of Construction Nguyen Van Sinh, has worked with around the developers of 180 housing and urban area projects since it was established last year in Ho Chi Minh City. Among those, almost 70 projects have been guided for continuous implementation. In Hanoi, over 700 projects have been on the radar of the local authorities, with around 420 of those already offered guidance for implementation.

According to the Ministry of Construction, most of the problems belong to the rights of localities, but cannot be fully applied due to weak capacity in law implementation.

“Moreover, there are many difficulties as projects were prolonged for years while the legal regulations have continuously changed over the years and left projects behind,” Sinh said.

Deputy Minister of Planning and Investment Do Thanh Trung said that the main obstacles relate to investment procedures and project implementation.

“To deal with this, the Ministry of Planning and Investment has revised regulations related to investor selection, approval procedures, adjustment of ventures and many others on the Law on Bidding and these revisions will help the implementation work well,” Trung said.

However, Trung stressed that there were still many issues related to projects that have been approved before the Law on Investment was implemented. To solve the problem, the Ministry of Planning and Investment coordinated with other ministries are developing a set of general guidelines which are expected to be issued this month.

Updating the implementation of the social housing credit package programme of $5 billion, the State Bank of Vietnam released that up to now, nine provincial People’s Committees have sent a list of 23 projects to participate. Apart from those, Phu Tho province announced three projects. Those 26 projects are expected to have credit of $540 million of total loan demand.

The prime minister asked for more reviews of the legal framework. In particular, he said it is necessary to accelerate the establishment of real estate trading platforms to promote the self-adjusting ability of the market and limit administrative intervention. Meanwhile, ministries and local authorities must focus on and expeditiously complete the planning and zoning work to ensure the market runs smoothly.

“To increase total supply and aggregate demand in the market, monetary policy should be proactive, flexible, timely, and more effective. In addition, it is necessary to speed up the consideration of reducing VAT, accelerate the disbursement of public investment, and implement national target programmes,” the PM stressed.

Le Tu Minh - Chairman, IMG

Medium-term interest rates in Vietnam, although reduced, are still at a very high level, making businesses reluctant and do not dare to borrow, and so do the homebuyers, so money is flowing into other areas instead of real estate.

The government should have a solution to lower the medium-term interest rate at around 8.5 per cent, the same as two years ago. In developed countries, medium-term interest rates are applied at only 3-5 per cent.

It should take measures to prevent or restrict real estate businesses from participating in banking business and vice versa. In fact, businesses participating in both these fields raise capital mainly for their own businesses and have little effect on society.

Besides capital, legal issues are the biggest difficulties of real estate businesses currently, and losses due to delays are assumed to be larger than losses due to red tape or bureaucracy. The government needs to have a decree on leveraging the powers and responsibilities of all levels.

Nguyen Quoc Hiep - Chairman, GP Invest

Real estate businesses are clearly seeing the great impact of the government’s synchronous and drastic measures in removing difficulties for the real estate market.

The specific impact of those policies and measures has helped the real estate market to have some signs at the end of the tunnel. Many investors have shown signs of recovery, many projects have had their difficulties removed, and more products have been launched to the market in the last two months.

GP Invest has a project with 10 years delayed due to prolonged land clearance. The Palm Manor Viet Tri Urban Area has now made positive changes thanks to specific decisions and handling by local authorities. We expect to launch the first products of this project to the market by early 2024.

However, in order to further accelerate the removal of problems for projects, the Prime Minister’s working group needs to ask the provinces to report statistics and solutions to solve delayed projects every three months.

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