Efforts to grow the real estate market from the second half of 2024

In the final stages of 2023, the Vietnamese real estate market received some positive information, such as supply and liquidity of the entire market tending to increase. However, in general, the market still has many difficulties, many shortcomings, and unresolved problems.

Speaking to reporters of the Journalist & Public Opinion Newspaper, Mr. Le Hoang Chau - Chairman of the Ho Chi Minh City Real Estate Association (HoREA) said that the real estate market has the prospect of recovering and growing again from the second half of 2024 onwards.

+ How do you evaluate the Vietnamese real estate market in general and Ho Chi Minh City real estate in particular in 2023?

- It can be seen that the first quarter of 2023 is the "bottom" of the real estate market. At present, the market has passed the most difficult period. However, in general, the real estate market is still very difficult, but the level of difficulty tends to decrease over time, the following month is better than the previous month, the following quarter is better than the previous quarter.

If we only consider Ho Chi Minh City, the housing segment in the first 9 months of 2023 tends to increase. However, the city continues to have no affordable housing, nor is there any social housing. This continues to cause the market to be out of balance between supply and demand, with both excess and shortage.

It is clear that from 2020 to now, high-end housing has always accounted for an overwhelming proportion of up to 70-80% of housing products on the market, the rest is mid-range housing and there is almost no affordable housing, leading to a shortage of affordable housing and social housing is the type of housing that meets the real needs of the majority of people.

Housing prices have been increasing continuously since 2017 and are still beyond the financial capacity of middle-income earners, low-income urban earners, civil servants, public employees, armed forces officers, workers and immigrants.

Because, for an affordable apartment costing 2-3 billion VND, even a person with low average income, saving about 100 million VND/year, would have to spend about 25 years to be able to buy a house.

If social housing policy is not changed, people paying personal income tax level 1, currently regulated to have income under 60 million VND/year, will not be able to buy a house.

In addition to supply factors, real estate transactions continue to decline sharply. According to the Ministry of Construction , in the first 10 months of 2023, the volume of real estate transactions decreased by 50% compared to the same period in 2022.

In addition, according to the report of Board IV, by the end of September 2023, the real estate inventory was very large, with a total value of up to 301,600 billion VND, an increase of 5% over the same period. It is necessary to have a solution to remove and bring this huge amount of inventory back to the real estate market to both create cash flow, create liquidity, remove difficulties for businesses and increase housing supply for the market.

However, in the context of the market facing many difficulties, the Government and ministries and branches have made great efforts to "rescue" the market.

It is known that in the first 10 months of 2023, to remove difficulties and promote the safe, healthy and sustainable development of the real estate market, the Prime Minister chaired 2 thematic conferences on real estate and social housing, issued 12 legal documents and issued executive instructions.

Typically, Decree No. 08, Decree No. 10, Decree No. 35, Resolution No. 33, dated March 11, 2023 on a number of solutions to remove obstacles and promote the safe, healthy and sustainable development of the real estate market.

In addition, there is Decision No. 338 dated April 3, 2023 of the Prime Minister "Approving the Project to invest in building at least 1 million social housing apartments for low-income people and industrial park workers in the period 2021 - 2030".

In October 2023 alone, the Prime Minister issued 3 very strong directives.

The first is Official Dispatch No. 965 dated October 13, 2023 directing "Removing difficulties in implementing land management, use, land allocation, and land valuation".

Second is Official Dispatch No. 990 dated October 21, 2023 directing "On continuing to resolutely implement solutions to increase access to credit capital, remove difficulties for production and business activities and perform the task of collecting the state budget in 2023".

In particular, Official Dispatch No. 993 dated October 24, 2023 "On continuing to resolutely implement solutions to develop a safe, healthy, and sustainable real estate market, contributing to promoting socio-economic development".

In the first 10 months of 2023, the State Bank held 02 conferences on credit for real estate and social housing; implemented a credit program of 120,000 billion VND to serve the program of developing 1 million social housing units, renovating and rebuilding apartment buildings in the period of 2021-2030 with interest rates 1.5-2% lower than commercial interest rates.

Meanwhile, the Ministry of Construction has submitted to the Government Decree 35 amending and supplementing a number of articles of the Decrees under the state management of the Ministry of Construction.

In particular, as Head of the Prime Minister's Working Group, the Ministry of Construction has proactively coordinated with ministries, branches, and localities and directly worked with many businesses to resolve obstacles and difficulties of a number of real estate and commercial housing projects.

Typically, the Working Group has coordinated with the People's Committee to resolve 30% of the total 148 projects with "legal problems", creating conditions for businesses to mobilize capital for 50% of future housing products, or to have investment policies approved, or to have detailed planning 1/500 approved, or to have land prices determined to calculate land use fees, land rent of the project and to issue "pink books" for more than 10,000 apartments to home buyers...

The above drastic measures of the Government and the Prime Minister have initially promoted and created very positive changes that have spread from ministries, branches to localities, cadres, civil servants, and public employees, and inspired the business community, people, and investors to overcome difficulties and support market confidence.

+ What is your forecast for the real estate market in 2024?

- Although the real estate market is still very difficult, there is every reason to firmly affirm the prospect of recovery and continued growth in a safe, healthy and sustainable development direction thanks to a number of driving forces.

Firstly, Resolution 18 of the Central Executive Committee directs the completion of amendments to the Land Law and related laws to ensure consistency and uniformity. In fact, competent state agencies are making efforts to remove legal obstacles, which are considered the biggest obstacles in the real estate market.

The National Assembly is also considering the draft Law on Land (amended), the draft Law on Housing (amended), the draft Law on Real Estate Business (amended), the draft Law on Credit Institutions (amended), and the draft Law on Property Auction (amended).

If these laws are issued to ensure consistency, uniformity, feasibility, and closeness to reality, the market will certainly recover very quickly.

Second, the total demand for housing to meet the real needs of society is still very large, especially the demand for affordable housing and social housing for the majority of middle-income and low-income people in society is very large.

Third, the middle class continues to grow steadily, despite falling incomes across the population.

However, in order for the market to accelerate, the Government also needs to consider some other bottlenecks that are creating barriers for the market, such as regulations requiring investors of commercial housing projects to reserve land for building social housing, specific land valuation procedures, land appraisal, land price decisions to calculate land use fees, land rental fees for real estate projects, etc.

+ Thank you very much!

Dinh Tran (Implementation)

Source: https://www.congluan.vn/nhung-no-luc-de-thi-truong-bat-dong-san-tang-truong-tu-nua-cuoi-nam-2024-post273590.html