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Jun 20, 2024 / 20:05

Vietnam Gov’t urges greater efforts to support real estate market

The housing market, like the economy, has shown positive recovery signs month after month, but difficulties are still present.

The Government has instructed the Ministry of Construction to closely monitor the situation and implement solutions to address real estate market difficulties, with the aim of making significant progress in the second half of the year.

 Hanoi from above. Photo: Pham Hung/The Hanoi Times

The request was mentioned in its Resolution No.93 in an effort to remove obstacles for real estate businesses in project development in the context of a market showing signs of recovery but still grappling with challenges.

Many projects currently face issues related to planning, legal, or delivery issues. The Ministry of Construction, the State Bank of Vietnam (SBV), and local authorities are also required to closely examine the reasons for the slow disbursement of the VND120 trillion (US$4.7 billion) social housing credit package. After more than a year, only about 1% of this package, or approximately VND1.14 trillion ($44.8 million) has been disbursed. Of this, around VND1.1 trillion ($43.2 million) has gone to investors in 11 projects, and the remainder to home buyers.

Therefore, these two bodies must urgently find solutions to increase disbursements and address issues related to loan recipients, interest rates, and lending procedures, stated the resolution.

The real estate market, like the economy, has shown positive recovery signs month after month. Data from the Vietnam Association of Realtors (VARS) indicates that the absorption rate of new supply reached nearly 31% in Q1, with about 6,200 successful transactions. This represents an 8% increase compared to the previous quarter and double the figure for the same period last year.

However, the Ministry of Construction believes that the market is still facing difficulties. The problems identified, such as the imbalance between supply and demand imbalances, will take time to resolve, stated the agency. Although supply has improved, it still does not meet demand. Additionally, the market structure is irrational, with a high proportion of luxury housing and a shortage of affordable housing and social housing. This imbalance has persisted for many years.

To further alleviate difficulties, the Government plans to propose that three laws related to the real estate market – the Land Law, the Housing Law, and the Real Estate Business Law – take effect early from August 1. For these laws to be effectively implemented, ministries, agencies, and localities must submit draft decrees, circulars, and guidelines to the Government by June.

At a seminar on June 19, Minister of Planning and Investment Nguyen Chi Dung acknowledged roadblocks related to land, paperwork, and inspections. He noted that hundreds of significant projects in major cities have been left unfinished for decades. "If these obstacles are removed, a significant resource for society will be unleashed," he emphasized, underscoring the need to address issues for businesses, especially in real estate.

This year, the Government is targeting a GDP growth rate of 6.5% and a CPI of 4%. To achieve these goals, the Government calls for a reasonable fiscal policy expansion, that is balanced with monetary policy, savings, and strict control of budget deficits and public debt.

The SBV is tasked with managing exchange rates and interest rates appropriately, strengthening supervision, and controlling risks related to non-performing loans and credit quality. It must also work with commercial banks to further reduce lending rates, prioritizing funds for social housing, green growth, digital transformation, and the circular economy.

To support production and business, the Government emphasizes the removal of legal barriers for citizens and businesses. Ministries, sectors, and localities should not delay or evade their responsibilities but urgently propose and recommend solutions for issues beyond their competence, as per the resolution.

Ministries and sectors are also instructed to improve the investment and business environment, simplify procedures, reduce compliance costs, and address issues related to VAT refunds, fire prevention and control, and traceability for citizens and businesses.