Hanoi real estate market will continue to deteriorate, the inevitable consequence of a series of inflexible regulations adopted earlier to regulate the market, said the Hanoi Department of Construction.
Putting off projects with poor infrastructure connection
According to Mr Nguyen Trong Hien, Director of the Housing Development and Real Estate Market (Hanoi Department of Construction), the real estate market has long been developing without proper instruction. Outdated mechanisms and policies which failed to keep pace with market development have driven the market to where it is hard to control. Real estate market also has to confront unstable, inconsistent, overlapped and situational legal regulations and policies, an incomplete real estate financial system and problematic land clearance and investment management reform.
He also stated that to control and to put the market into orbit, the best solution is to have an appropriate financial policy strong enough to control the market flow. Credit institutions find it hard to increase the proportion of loans in the context of an economy riddled with difficulties. In that context, Mr Nguyen Trong Hien assumed that specific criteria on financial lending, such as giving priority to projects with high liquidity, possibility to recover debt, capable of capital balance and restricting lending with speculative purpose, should be given.
The government should introduce policies to reduce tax, or make tax exempt, social housing projects so that developers could lower the selling price. Provinces should set up housing saving funds to support low-income earners who are eligible to buy houses. This will be the basis of turning low-income people’s dream of owning a house into reality.
According to Mr Nguyen Trong Hien, besides providing mechanisms and establishing policies aimed at redirecting the real estate market, the government should also introduce and impose measures promoting strict observation of the law on housing, increase the condo segment proportion, which accounts for 60 percent in the whole market, and simultaneously diversify the area. Additionally, the government should restrict the development of luxury housing such as villas and penthouses, and supervise projects to adjust apartment size to meet market demand.
Mentioning the issue of “ghost urban areas” and unused villas badly affecting the image of the city, Mr Nguyen Trong Hien proposed that the government put a stop to construction of projects not in compliance with the infrastructure and incapable of providing urban services. Moreover, developers must strictly meet the regulations on split plots, the selling of ground and crude houses in housing development projects and the commitments of investors as well as homebuyers on the construction of technical and social infrastructure. Additionally, land speculators should be severely punished.
Building small-size apartments
Mr Nguyen Tran Nam, Deputy Minister of Construction assumed that the freezing real estate market can be a chance to reconsider projects that are being and will be invested. Planning and choosing investment location should be carefully considered to avoid launching projects not in compliance with the infrastructure and incapable of providing urban services. At the same time, the rate of for-rent houses and houses for low-income people should be increased to meet ordinary people’s demand and solvency.
The Government should increase the social distinctiveness of low-income house segment. Currently, ordinary people still find it hard to access this segment, partly because the price remains high and the apartment size remains big, which makes related costs higher.
Mr Nguyen Van Duc, Director of Dat Lanh Real Estate Co.Ltd, estimated that in Hanoi area, there are six low-income housing projects including 3,750 houses, yet the number of unsold houses reached 40 percent despite of the cheap selling price of only VND 10-13 million per sq.m. The majority of these houses are over 60 sq.m in size, which makes them unaffordable for a large number of people eligible to buy houses. This has cooled down Hanoi’s low-income housing market. On behalf of investors, Mr Nguyen Van Duc proposed that the State allow the construction of smaller apartments to increase liquidity.
Holding the same opinion with Mr Duc, Mr Phan Thanh Mai, General Secretary of the Vietnam National Real Estate Association, believes that the State should issue regulations on constructing small-size apartments with the area of above 25 sq.m. This will help increase the liquidity of the market and also pave the way for ordinary people to realize the dream of owning a home.
Luong Tuan
Vietnamese
