Supply continues to decline, transactions are quiet; Ministry of Construction points out 3 major challenges "hindering" real estate businesses

Regarding information on housing and real estate market in the second quarter of 2023, the Ministry of Construction said that although the real estate market has many positive signals, supply continues to decline, causing transaction volume to be sluggish.

Quý II/2023: Nguồn cung tiếp đà sụt giảm, giao dịch trầm lắng; Bộ Xây dựng chỉ ra 3 thách thức lớn 'cản bước' doanh nghiệp bất đống sản

Lower growth than the same period in 2022

According to the Ministry of Construction, in the second quarter of 2023, to solve difficulties for the real estate market, the Government and the Prime Minister continued to issue a number of policy mechanisms and Directives with many very specific and drastic solutions such as: Resolution No. 33/NQ-CP dated March 11, 2023, Official Dispatch No. 194/CD-TTg, Official Dispatch No. 469/CT-TTg dated May 25, 2023, Official Dispatch No. 470/CT-TTg dated May 26, 2023, Official Dispatch No. 634/CD-TTg... At the same time, ministries and branches submitted to the Government to issue amendments and supplements to policy mechanisms to resolve many issues regarding mechanisms and policies.

The above instructions show that the Government has been very determined and acted promptly in the context of emerging difficulties that need to be urgently cleared, promoted growth and minimized social problems to overcome difficulties and challenges, promote the real estate market to develop in accordance with the law, effectively, safely, healthily and sustainably.

Accordingly, the Prime Minister has resolutely directed the Working Group, the Ministry of Construction, the Ministry of Finance, the State Bank and other ministries and branches to urgently and actively deploy and carry out assigned tasks, specifically actively working with a number of major localities such as Ho Chi Minh City, Hanoi, Da Nang City, Hai Phong City, Can Tho City, Dong Nai Province and a number of real estate enterprises to listen to reports, grasp information, situations and review each specific real estate project to discuss, guide, and answer to remove difficulties and obstacles in implementing real estate projects.

Thereby, difficulties and obstacles for real estate projects in the area have been gradually resolved. However, the specific results in resolving difficulties and obstacles need to continue to effectively implement solutions, especially localities and enterprises need to proactively propose specific solutions for each real estate project and focus on resolving them according to the principle that the difficulty belongs to the authority of which level or agency, that level or agency must resolve it completely.

However, according to reports and assessments by a number of economic organizations and localities, the real estate sector in the quarter still had a lower growth rate than the same period in 2022, and there are still many difficulties and challenges, specifically: regarding institutions, legal aspects of projects, credit sources, bonds, etc. and the organization, implementation and enforcement of localities. Therefore, in the coming time, ministries, branches, localities and enterprises need to continue to urgently deploy and implement assigned tasks, propose more specific solutions to quickly remove difficulties and obstacles and develop the real estate market safely, healthily and sustainably.

7 commercial housing projects completed in the second quarter of 2023

In the second quarter of 2023, the whole country had only 7 completed commercial housing projects with 2,424 units (852 apartments, 1,572 individual houses). The number of projects was only about 50% compared to the first quarter of 2023 and about 29.17% compared to the same period in 2022.

In addition, the country currently has 986 commercial housing projects under construction, with a scale of 413,539 units. The number of projects is about 141.26% compared to the first quarter of 2023 and about 90.38% compared to the same period in 2022. In addition, there are 15 newly licensed housing projects with 3,239 units. The number of projects is only about 88.24% compared to the first quarter of 2023 and about 51.72% compared to the same period in 2022.

Regarding social housing and worker housing projects, as of the second quarter of 2023, there are 294 projects under construction nationwide, with a scale of about 288,499 units. Of which, the social housing development program for low-income people in urban areas is continuing to develop 201 projects, with about 162,227 units. There are 6 projects eligible to sell future housing, with about 1,892 units. In addition, 93 social housing projects for industrial park workers are continuing to be developed with a construction scale of about 127,272 apartments.

According to data compiled by localities, in the second quarter of 2023, there were 51 housing projects eligible to sell future houses, with a scale of 6,205 apartments. The number of projects was about 98.08% compared to the first quarter of 2023 and about 63.75% compared to the same period in 2022.

Specifically, the Northern region has 14 projects (931 apartments; 1,143 individual houses); the Central region has 16 projects (200 apartments; 2,092 individual houses); the Southern region has 21 projects. (215 apartments; 1,624 individual houses). The proportion of the number of types of real estate eligible for sale is mainly land and individual houses in the project.

The Ministry of Construction also said that in the second quarter of 2023, there were 96,977 successful transactions. Of which, there were 29,725 transactions of apartments and individual houses, equal to about 75.61% compared to the first quarter of 2023, equal to about 43.03% compared to the same period in 2022. In the land segment, there were 67,525 successful transactions, equal to about 99.98% compared to the first quarter of 2023, equal to about 31.57% compared to the same period in 2022.

3 groups of business difficulties

The Ministry of Construction said that by the end of the second quarter of 2023, the number of dissolved real estate enterprises increased by about 30.4% compared to the same period in 2022. The number of newly established real estate enterprises also decreased by about 61.4%. Currently, enterprises in the real estate sector continue to face many difficulties and challenges, which can be divided into 3 main groups of difficulties and obstacles.

Firstly , the group of difficulties and legal problems: currently many real estate projects are facing difficulties and legal problems, specifically the implementation of regulations on land valuation methods is still facing many problems.

In addition, the land use plan has been announced but there is no annual land use plan at the district level; there is a detailed plan of 1/500 that has been approved but is not consistent with the higher-level plan (the previous higher-level plans are no longer suitable and are being reviewed, adjusted, and updated according to regulations); regarding the adjustment of investment policies.

Second , the group of difficulties and obstacles in implementation organization: the coordination mechanism between departments, branches, sectors and localities is not timely and synchronous, which has also caused many difficulties and obstacles for real estate projects, specifically: in the work of site clearance, compensation, support and resettlement, land recovery agreement, and compensation price with people.

Along with that, the work of determining land prices to calculate land use fees and allocate resettlement land (coordination between agencies related to land valuation is not timely); some investors have not coordinated closely with local authorities to carry out project documents and procedures.

Third , the group of difficulties and obstacles in capital sources: currently, real estate enterprises still face many difficulties in accessing credit loans and are almost unable to mobilize corporate bond capital and other capital, leading to a lack of capital to implement projects (having to delay progress, stop implementation).

Accordingly, real estate businesses are continuing to face many difficulties in liquidity and cash flow, especially in the context of great pressure on maturity and repayment of corporate bonds in the last months of 2023, many businesses are late in paying principal and interest on bonds.

The Ministry of Construction also believes that investor confidence and low liquidity in the real estate market have led to a lack of capital for real estate businesses, many of which are under pressure from short-term debt and total debt greater than the size of their assets. In addition, fluctuations in foreign exchange rates, gasoline prices, and construction material prices have led to increased business costs, significantly affecting the production and business activities of businesses.

"Faced with the above situation, many real estate businesses have been forced to delay or temporarily suspend project implementation, forced to cut and readjust the scale of human resources since the beginning of the year, or employees have proactively asked to quit their jobs. Many businesses have been forced to reduce more than 60% of their workforce to overcome the current difficult period," said the Ministry of Construction.

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