Instabilities in the real estate market were identified at a recent national symposium with the theme of Vietnam’s real estate market in the context of amending the Land Law, Housing Law and Real Estate Business Law. The symposium was organised by the National Economics University in coordination with the Ministry of Natural Resources and Environment and the Ministry of Construction.
Localised increase in housing and land prices
According to Professor Pham Hong Chuong, Rector of the National Economics University, legal changes to the real estate market in the new context, including the implementation of the Land Law (amended) 5 months earlier than prescribed, the implementation of the Housing Law (amended) and the Real Estate Business Law (amended) are expected to bring the market to a more sustainable recovery.
However, the actual developments of the real estate market in the initial period of applying new legal documents have not met expectations, many bottlenecks have not been thoroughly resolved.
Nguyen Dac Nhan, Deputy Director of the Land Department under the Ministry of Natural Resources and Environment, emphasised that the 2024 Land Law (amended) has been completed with many important innovations.
Specifically, the Law has added regulations on multi-purpose land use; supplement and improve regulations on land use conversion to implement investment projects, create a more comprehensive and complete legal framework on land management, and clear and liberate land resources, thus contributing to the economical, effective and sustainable management and use of land resources in the new period, meeting the requirements of socio-economic development, ensuring national defence and security, and protecting the ecological environment.
This is also the driving force to promote the real estate market to develop in a safe, healthy and sustainable manner as expected and desired by the State and the people.
According to Vuong Duy Dung, Deputy Director of the Department of Housing and Real Estate Market Management under the Ministry of Construction, as soon as the laws related to the real estate market took effect, the market had changes due to improved supply in the segments. Housing prices were basically stable and fluctuated little, however, in some central areas of large cities, real estate prices fluctuated locally.
In Hanoi alone, there are a number of real estate projects and land auctions that are higher than the starting price and the general level. This is an issue that needs further assessment to clarify where the impact of the increase in real estate prices comes from, whether it is from the newly issued policy mechanism or not. In the market, the interest of people and investors in real estate has increased, but the number of transactions is limited and not much in most segments.
Research by Professor, Dr. Hoang Van Cuong, member of the National Assembly’s Finance and Budget Committee, also showed that since 2023, housing and land prices in Hanoi have been increasing rapidly. However, in the southern provinces, including Ho Chi Minh City, housing and land prices have almost not increased, except for apartment buildings, which have maintained an increase of about 6%.
The reason is that the number of apartment projects, social housing, and new products being implemented has remained very modest while demand is increasing rapidly, causing the real estate market to be unbalanced in supply and demand in some segments.
Solving the problem of land and capital
Developments in the real estate market were also one of the notable topics in the 38th Session of the National Assembly Standing Committee. Examining the Government’s Report on the results of the implementation of the socio-economic development plan for 2024 and the projected plan for 2025, the National Assembly’s Economic Committee stated that the real estate market has shown signs of recovery but is still facing difficulties.
Real estate businesses continue to face difficulties in liquidity and cash flow. The product structure in the market is unbalanced when the affordable segment is scarce.
Regarding the development of social housing, there is currently a situation where people in need cannot buy due to complicated procedures and speculation, with a huge price difference between the selling price registered by the investor with the State and the actual selling price on the market. There is a situation where the subjects buying, selling, and renting social housing are not workers, labourers, or people with real needs for this type of housing.
Therefore, the inspection agency recommends that the government conduct a comprehensive inspection of the development of social housing in recent years to find solutions and take strong measures against violations. In addition, there is a recurrence of the situation of deposit cancellation after winning the auction, negatively affecting the price level and the housing market.
The inspection report of the National Assembly’s Economic Committee also shows that the situation of monopoly, price inflation, wave creation, and land speculation has pushed up land prices, causing buying and selling to take place almost exclusively among speculators.
Meanwhile, people and businesses have difficulty accessing land because land prices are high and beyond their ability to pay. This situation will leave negative consequences, affecting socio-economic development. It is time to identify land as a special means of production of society, instead of a commodity bought and sold for profit, in order to devise a thorough solution.
According to Professor, Dr. Hoang Van Cuong, there are many positive factors affecting the real estate market in the coming time. That is, GDP growth is forecast to reach about 7% in 2024, the rapid urbanisation rate makes real estate demand forecast to continue to increase; the new legal framework will clear the procedural congestion in the past when many new laws are implemented; Localities focus on building local and urban planning, thereby creating new development space.
In addition to handling legal bottlenecks, solving the problem of capital sources to contribute to removing the current instability in the real estate market is very necessary. In particular, reducing short-term credit interest rates will not help increase real estate supply, instead, the long-term credit interest rate package for new real estate loans will create new demand and balance in the market.
This financial source cannot rely on commercial banks but can come from the Vietnam Bank for Social Policies, real estate bonds and the form of prepayment by buyers (buying future housing). In addition, the trust fund will open a more flexible capital calling market, when it is possible to invest in new real estate projects based on ideas, with a small amount of only a few million VND.
