Stimulus package gets new tune-up

The Ministry of Construction have tweaked proposals for the $1.4 billion stimulus package

In the latest report of the Ministry of Construction (MoC) on the real estate market submitted to the prime minister, Minister Trinh Dinh Dung proposed that the Vietnamese government solutions to stimulate the market be continued with further adjustments to ease access to credit for the purchase of social housing.

The minister specifically requested that cities and provinces refuse the go-ahead of new commercial housing developments and that any final decision on such cases should rest with the prime minister.

The MoC also agreed with the state bank’s proposal that the deadline for housing loans sourced via the government’s VND30 trillion ($1.4 billion) real estate market stimulus package be extended from an original 10 to 15 years for repayments. The package will be expanded to include owners of social housing contracts signed before January 7, 2013, but which have yet to conclude payments on their instalments.

The ministry also proposed to expand the package to include customers wanting to purchase commercial housing worth VND 1.05 billion ($47,000) per unit and expand the number of commercial banks able to apply the package.  Currently only five commercial banks, the Bank for Investment and Development of Vietnam, Vietinbank, Vietcombank, Agribank and the Housing Bank of Mekong Delta, have implemented such loans after the Vietnamese government officially approved the package on June 1, last year. 

Tran Nhu Trung, deputy general director of Tan Hoang Minh Group told VIR that the support policies were welcome as they helped both property developers and potential buyers. However the important point now was to ensure that the myriad number of social housing projects facing stagnation could now access preferential funding. The new support policies would also provide more opportunities for buyers. 

According to Trung, the MoC’s proposal to stop granting the go-ahead for commercial housing and new urban projects was based on fundamental oversupply in the market. Trung showed that demand in the fourth quarter of last year absorbed just 10 per cent of the newly released commercial property developments.

“Very few financially strong investors want to change their commercial housing into social housing as it is very difficult for them to make a profit,” Trung claimed.

Nguyen The Chinh, deputy director of Viglacera Infrastructure Development and Investment Company, the developer of six social housing blocks in the Dang Xa urban area in Hanoi told VIR that the new proposal would receive a positive response as many low-income earners were struggling to own their own homes due to difficulties in accessing loans.

Chinh added that due to the current support policies, Viglacera had done well last year and the company planned to kick off two new social housing projects in April. 

The latest MoC report on the local real estate market during the first two months of this year submitted to the prime minister revealed positive results. About 1,300 units were sold in Hanoi, while 1,000 units were sold in Ho Chi Minh City.

Outstanding loans to the real estate market also registered significant changes. Specifically, scores of banks opened preferential loan packages to bolster real estate transactions and outstanding loans to the sector in 2013 increased 14.7 per cent year-on-year.

Minister Dung said the figures for the first two months implied a more healthy market, while stable prices were attracting buyers.

The total value of property inventories in the country was valued at VND93 trillion ($4.4 billion), down 1.87 per cent compared late last year, the report stated. Apartments accounted for 19,210 units, equal to VND28.6 trillion ($1.2 billion) while houses totaled 13,516 units, worth VND24 trillion ($1.1 billion)

In Hanoi, unsold housing stocks were valued at VND12.6 trillion ($600 million), down 2.8 per cent compared late last year, with apartments accounting for 3,164 units, down 294 units compared to late last year, while houses reached 3,096 units, down 26 units compared late 2013. The areas include Co Nhue, 505 Minh Khai, Dolphin Plaza, apartments for sale projects in Trung Hoa- Nhan Chinh area were the main highpoints for sales.

The MoC said that housing inventories in Hanoi were located mostly in projects on the outskirts of the city, with areas mostly characterised by incomplete infrastructure. Le Trong Tan new urban project in Ha Dong, Gamuda- Yen So Gardens, Nam An Khanh urban project were all victims of this. Apartments valued at over VND100 million ($4,700) per square metre also accounted for a large proportion of housing stock.

Meanwhile in Ho Chi Minh City, the total value of the city’s unsold housing stock reached VND16.7 trillion ($800 million), down 4.32 per cent compared late last year. Unsold apartments accounted for 7,520 units, equal to VND13 trillion  ($618 million)down 310 units compared late last year, while unsold houses totalled 755 units, equal to VND2.1 trillion ($99.6 million), down 52 units compared late last year.

Minister Dung said this year would also see the Construction Law, Housing Law and the Law on Real Estate Business all help bring greater clarity to the real estate market.

The minister also revealed that even when the $1.4 billion-support package was finally fully disbursed there was still a raft of credit programmes and offers from other financial institutions that would help ease the difficulties people were facing in buying low-cost social housing.