Progress in Affordable Housing Segment

 

Representatives of the Ministry of Construction, localities and businesses showed their optimism about the real estate market. However, the progress was mainly seen in the affordable housing segment for low-income earners, typically with small living areas, while upmarket and midmarket segments remain lacklustre.

 

The consistent implementation of solutions to deal with difficulties on the real estate market, associated with the national housing development strategy, particularly social housing strategy, combined with urban development planning control, has produced positive results. The real estate market is showing signs of positive changes, especially in the last months of 2013.

 

Construction Minister Trinh Dinh Dung said the real estate supply is being structured closely towards market demand. The supply of social housing, small apartments and low-priced residences is increasing to meet the demand of the majority. As many as 57 projects have been registered for conversion from commercial housing to social housing, with a total supply of 34,837 apartment units and a total investment capital of VND20,567 billion. Up to 62 projects registered to adjust the supply from initial 31,999 apartment units to 40,500 units (an increase of 8,501 units).

 

Notably, real estate inventories tend to decline. According to statistics, as of December 15, 2013, total inventory value was about VND94,458 billion, down 26.5 percent from the first quarter of 2013. Apartments with an individual area of less than 70 square metres and a price of under VND15 million per square metre in major cities are sold quite well and are not stockpiled as inventories. Overall, the real estate market revived in the last months of 2013 and real estate credit growth was higher than the overall credit growth. Many uncompleted projects continue to be developed and opened for sale. The customer confidence in the market is gradually recovering. Housing prices have fallen much from the peak during the 2008 - 2010 overheating period. The trading volume on the market incremented in the last months of 2013, with liquidity in the third and fourth quarters more than doubling that in the first and second quarters, particularly small apartment segment with reasonable prices.

 

In addition to positive signs, Minister Dung frankly pointed out existing problems and limitations of the construction industry in recent years, specifically in 2013. Social housing development in some areas has not been given due attention and remained unattractive to developers. The supply of social housing is much lower than the real demand. Apartment service quality and apartment management are problematic in some places. Although the real estate market is positively changing, there are still many difficulties to overcome. Real estate inventories are high in upmarket and midmarket segments. The disbursement speed of the VND30 trillion credit support package is very slow.

 

He said one of the central tasks in 2014 is focusing on executing solutions to deal with difficulties on the real estate market, associated with the national housing development strategy, particularly social housing strategy, combined with urban development planning control, has produced positive results. The ministry will continue to review, classify and restructure housing development projects and new urban projects; boost affordable social and commercial housing supply; and actively support enterprises and buyers to access the credit support package worth VND30 trillion.

 

The revival of the real estate market in late 2013 is creating expectations for 2014. However, many experts recommend a continued cautious approach to market trends. Dr Pham Sy Liem, Vice Chairman of the Vietnam Construction Association, said policies should also take middle-income earners into account instead of just low-income earners. “Middle-income earners can repay their loans; thus policies will reactivate the market,” he added.

 

At the meeting, Deputy Prime Minister Hoang Trung Hai directed that the decree on social housing has guidance on interest rates and loaning of the credit support package but commercial housing needs a more suitable credit package. He recommended a more far-sighted vision to prepare for the ending of the credit support package.