Real estate problems require cooperation on all levels

February 17, 2023 | 21:33
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Management agencies, businesses and buyers must join hands to solve the problems in the real estate market, according to Prime Minister Pham Minh Chinh at a national conference in Hanoi this morning.

While delivering his speech at the conference, which focused on how to remove difficulties and promote the real estate market as a place for safe, sustainable development, the Prime Minister stated that the government has been working on solving the difficulties in the market since the end of last year.

Real estate problems require cooperation on all levels

“It is important to be aware of the problem and have a solution. In particular, the solution must be based on the principle of harmonising benefits and sharing risks between the state, people and businesses,” PM Chinh said.

The PM went on to point out his main concerns in the property market, including its serious imbalance with an abundance of high-end units and a chronic shortage of affordable housing. He also noted that the average house price is now much higher than the average income. Vietnam’s per capita income is currently $4,100 per year, but the average price per square metre in Ho Chi Minh City has reached VND55 million ($2,390). Moreover, management policies have not kept up with market developments and there are many legal problems and difficulties for buyers in accessing capital.

Going into detail, the PM asked state management agencies to review their mechanisms, policies and laws, strengthen supervision and solve emerging problems. The banking and finance side must take measures to unclog credit sources, such as bonds and securities.

Chinh asked commercial banks to reduce costs and strengthen digital transformation so that they can reduce interest rates. At the same time, he requested banks support real estate businesses to restructure debts and reduce fees. However, property firms must ultimately be responsible for themselves and solve their own problems. Specifically, businesses must forecast the market well and restructure prices appropriately to promote liquidity.

Prime Minister Chinh requested government agencies at all levels to remove obstacles and speed up the completion of provincial and city planning.

Deputy Minister of Construction Nguyen Van Sinh said that in the second half of 2022 and early 2023, the real estate market has faced concerns such as supply issues, unbalanced product structure, and low turnover. Enterprises are facing difficulties in accessing capital, leading to project implementation being halted, with the associated job losses exacerbating the economic situation.

Following the conference, the government expects to issue a resolution on a number of solutions to remove concerns and promote the healthy and sustainable development of the property market. The conference took place during the current difficulties facing the real estate market, with the two biggest bottlenecks related to legal and capital resources. The business community, investors and experts all expect the government to make specific and clear decisions to revive the market soon.

Bui Thanh Nhon - Chairman of Novaland

During this period, enterprises only ask for support on mechanisms to overcome difficulties. Specifically, Novaland have asked the Prime Minister to urgently consider the following recommendations; allow banks to relax, postpone and maintain debts for real estate projects over the next 2–3 years; and remove the legal obstacles for delayed projects.

Currently, Novaland has VND25 trillion ($1 billion) blocked at commercial banks, of which, according to credit conditions, more than VND10 trillion ($434 million) will be eligible for release when Novaland completes a number of legal procedures. If within the next 1–2 months this problem is resolved, Novaland will have capital to continue operating normally. Furthermore, Novaland has proposed the reduction in lending interest rates. The government should also issue a draft amending Decree 65, to remove obstacles on bond issuance.

Pham Thieu Hoa - Chairman of Vinhomes

Currently, the real estate market is experiencing problems such as slow legal procedures for approving projects, limited credit flows, scarce housing supply, and the inability of corporate bonds to be issued.

Meanwhile, people's demand for homeownership is great, while the supply of affordable housing is too low.

If these difficulties continue without timely solutions, many real estate businesses will have to close, causing a domino effect on the overall economy.

Dr. Le Xuan Nghia - National Financial and Monetary Policy Advisory Council

The real estate market is experiencing a shortage crisis. A sustainable real estate policy should be built with the view that land is a rare resource and housing is an essential need.

The problems of the real estate market are negatively affecting the economy, including the industrial sector. This works against the goal of turning our country into a developed and high-income country by 2050.

We recommend that the government accelerate the completion of the legal framework that will allow businesses to issue bonds. At the same time, it is necessary to study the issue of guaranteeing corporate bonds with collateral, by state-owned banks, or reputable credit institutions. On the other hand, it is necessary to have clear regulations on bond credit ratings in the near future.

Enterprises themselves also need to actively restructure, ensure they have a sound financial foundation, and focus less on short-term success.

By Bich Ngoc

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