Likely Access to Affordable Quality Projects

 

According to the Ministry of Construction, the capital Hanoi has witnessed some 2,300 successful transactions from the beginning of this year, (including 1,500 successful transactions in the first quarter, doubling the volume in the same period in 2013). Affordable apartments, typical of small areas, reasonable prices, convenient traffic accesses, attracted most buyers. Times City and Royal City, both invested by Vingroup, sold 378 apartments in the first quarter; Victoria Apartment in Van Phu New Urban Zone in Ha Dong District, invested by Van Phu Invest Company, sold nearly 400 units; Condo Complex at 175 Nguyen Trai Street, Thanh Xuan District also had nearly 70 successful transactions; Mulbery Lane Project in Mo Lao Commune, Ha Dong District, invested by Capitaland - Hoang Thanh, sold 40 apartments.

 

Deputy Construction Minister Nguyen Tran Nam said the Hanoi real estate market is having positive signs, with more successful transactions reached. Remarkably, previously unsellable projects are now selling very well. Thus, this will help reduce inventories and increase revenues for investors.

 

In Ho Chi Minh City, around 1,300 successful transactions were completed in the first four months, a similar volume from a year ago. Prices are now quite reasonable after a long losing run in many years.

He noted that the Ho Chi Minh City real estate market had a lot of optimistic signals in the first quarter. Most transactions were involved in small apartments, with selling price below VND15 million per square metre.

A good increase in successful transactions has helped reduced inventories. At the start of this year, inventories fell 26 percent from the first quarter of 2013. “Apartment inventories have dropped significantly, especially small apartments,” Deputy Minister Nam said.

 

He said that the market will have positive changes. The supply will focus on downmarket segments, characterised by small areas and selling prices below VND20 million per square metre. This segment has the highest demand for the time being. A better performance was also seen in upmarket projects situated in prime locations.

 

However, the Ministry of Construction noted that the market will cause a lot of difficulties for real estate projects far from the downtown and short of basic infrastructure. Besides, little-experienced investors with limited financial source will still face hardships and they will be likely to leave the market to give the way to professional investors. This will bring more opportunities for home buyers when they have access to affordable quality projects.

 

To create a good administrative mechanism in support of long-term stable, controlled development of the property market, Deputy Minister Nam put forth some recommendations.

 

For credit support package worth VND30 trillion, the Government should allow a longer payment term, from 10 years to 15 years (for individual customers); expand the scope of benefited homebuyers who purchase houses with a total value of no more than VND1.05 billion (no limit to area and price); allow residents in frequently flood-hit areas in central coastal provinces (have no home or have seriously degraded shelter) to borrow money to build and upgrade houses with an interest rate of 4 percent per annum; allow State employees and armed personnel having residential land to borrow money to build or repair houses (value is limited at 80 percent of VND1.05 billion); and expand the scope of borrowers to people buying houses before January 7, 2013. No time limit is imposed on the implementation of this credit package.

 

The Ministry of Construction proposed that, apart from currently permitted State-owned banks, joint stock commercial banks be allowed to deploy the VND30 trillion credit package as stipulated in the Government’s Resolution 02/NQ-CP.

 

Specially, in its proposals submitted to the Prime Minister this time, the ministry annulled the provision that localities are not allowed to license new commercial housing development projects and new urban zone projects in 2014 as it ratified earlier.

 

The ministry also asked the State Bank of Vietnam to direct and urge commercial banks to speed up credit disbursement for borrowers as stipulated in the Resolution 02. It also proposed the SBV to work with it to issue changes to criteria and procedures for borrowing money from the VND30 trillion housing support package to apply uniformly in assigned banks.

 

The governing People's Committees of centrally governed provinces and cities were told to direct grassroots communal governments to substantiate housing status for people who apply for buying and leasing social houses; speed up the development of social housing projects, commercial housing projects with individual residential unit of less than 70 square metres and selling price under VND15 million per square meter and old apartment upgrading projects. Commercial housing projects will be facilitated to be changed into social housing projects.

 

While receiving the proposals from the Ministry of Construction, Deputy Prime Minister Hoang Trung Hai said the Government will consider such requests and told the Ministry of Construction to focus on perfecting housing and real estate market institutions, particularly the perfection of Construction Law, Housing Law and Real Estate Business Law to the submit to the lawmaking National Assembly in the next session meeting for ratification.