Proposing a series of solutions for sustainable development of the real estate market

Minister of Construction Nguyen Thanh Nghi clarified issues related to the real estate market at the question-and-answer session on the afternoon of June 8. Photo: VGP/ Nhat Bac

Clarifying issues related to the real estate market, Minister of Construction Nguyen Thanh Nghi affirmed that the real estate market is one of the important markets of the economy, playing an important role in attracting resources, creating fixed assets for the economy, promoting the development of about 40 other economic sectors and fields (capital market, construction, construction materials production, labor, etc.) to meet the needs of housing for people, urban development, industry and tourism.

According to Minister Nguyen Thanh Nghi, the real estate market in our country has recently developed strongly in terms of scale, level, capacity, and experience of market participants... making important contributions to economic development, macroeconomic stability, and ensuring social security of the country.

The system of policies and laws related to the real estate sector has been basically completed, including: the 2014 Law on Real Estate Business, the Land Law, the Housing Law, the Investment Law, the Bidding Law, the Construction Law, etc. and many decrees and circulars have been issued to facilitate real estate investment and business activities.

Minister Nguyen Thanh Nghi said that in 2021 and the first quarter of 2022, the real estate market still faced many difficulties due to the impact of the pandemic, but it has adapted, gradually changed, and shown signs of recovery and development.

Specifically, the total volume of real estate transactions was higher than the previous quarter and the same period in 2021; product absorption rates in most segments were high and there was almost no new real estate backlog; the vacancy rate of offices and commercial premises for lease gradually decreased...

Real estate market is still limited and inadequate

Minister Nguyen Thanh Nghi also frankly pointed out that the real estate market is revealing limitations and shortcomings, with signs of instability and unhealthyness.

The legal system related to land, investment, construction, real estate business... still has shortcomings that need to be amended to unify: Forms of selecting investors for projects using land; determining land prices; land use regimes, regulations for new types of real estate, mixed-use, multi-functional; processes and procedures for implementing real estate projects...

The implementation of investment and construction of real estate projects in most localities has encountered many difficulties, causing a sharp decline in real estate supply in all segments. The number of newly approved projects, construction commencements and completions in the past time is still limited, failing to meet the demand for commercial housing, social housing, worker housing and housing for low-income and middle-income segments.

On commercial housing supply:In 2021, the total number of completed commercial housing projects was 172, equal to about 60% of the number of projects compared to 2020. In the first quarter of 2022, the number of completed commercial housing projects was 22, equal to about 47% compared to the fourth quarter of 2021 and about 54% compared to the same period in 2021; the number of commercial housing projects under construction was 1,216, equal to about 88% compared to the same period in 2021; the number of newly approved commercial housing projects was 39, equal to about 80% compared to the fourth quarter of 2021 and about 41% compared to the same period in 2021.

On the supply of social housing and workers' housing,Minister Nguyen Thanh Nghi said that so far only 7.3 million m3 have been achieved.²/12.5 million m²as planned. Of which, housing for workers is 2.7 million m2 equivalent to 54,000 apartments. Social housing for low-income urban people is equivalent to 4.6 million m2.²with 92,500 apartments. The whole country is currently continuing to implement 339 social housing projects, but the implementation speed is very slow, of which workers' housing is 7.6 million m²With more than 152,000 apartments, social housing for low-income urban people is 10.96 million m²With 219,000 apartments, these projects are currently being implemented very slowly and have only recently restarted after the credit support package under Resolution 11 of the Government was announced.

About tourism and resort real estate:In 2021, there were 52 projects nationwide with 13,600 tourist apartments and office apartments, 2,280 tourist villas approved, the number of projects was about 35.4% compared to 2020. In the first quarter of 2022, the number of tourism and resort projects implemented and completed nationwide was very small, however, the supply of this segment continued to show signs of surplus (exceeding the market forecast for 2025).

The product structure is not suitable, there is collusion to "hoard goods" and "inflate prices".

According to Minister Nguyen Thanh Nghi, the structure of real estate products is not suitable, mainly the mid-range and high-end housing segments, and tourism real estate has signs of surplus. Meanwhile, there is a severe shortage of social housing, housing for workers and commercial housing with suitable prices for low-income and middle-income people.

Real estate prices, especially housing and land prices, are constantly increasing and are higher than people's incomes. This makes it more difficult for low-income workers in urban areas and industrial park workers to access and create housing.

Along with that, real estate trading floors operate unstably, there is a phenomenon of collusion with each other to "hoard goods", "inflate prices", causing virtual fever, disrupting the market; real estate brokerage activities are not well controlled.

According to Minister Nguyen Thanh Nghi, the management of construction planning, land use planning and real estate market in localities still exists and is inadequate.

The Minister said that some localities have had the phenomenon of land division and sale of plots of land that are not in accordance with regulations, not in accordance with planning, lacking infrastructure but have not been inspected; information work, transparency about planning and infrastructure projects, upgrading urban areas and administrative units are still not adequate and timely.

Referring to the capital flow into real estate, Minister Nguyen Thanh Nghi said that the control of capital flow into the real estate sector is not yet strict, and there are still potential risks, especially in the issuance of corporate bonds for real estate businesses.

Along with that, there are no long-term, stable sources of capital for the real estate market (no housing savings banks or funds; no secondary financial market for real estate has been formed).

Tax policies on ownership and use of real estate for real estate transactions and business activities do not distinguish between use and investment, business, buying and selling, leading to speculation, hoarding of real estate, and even tax evasion in real estate transactions, causing budget losses.

"In addition, the real estate market's operations lack transparency due to the lack of an information system, leading to exploitation, spreading of rumors, and market disruption," Minister Nguyen Thanh Nghi pointed out.

8 solutions for the real estate market to develop stably, healthily, effectively and sustainably

From the difficulties, obstacles, shortcomings and experiences of other countries, to ensure the real estate market develops stably, healthily, effectively and sustainably, contributing more positively to economic development, the Ministry of Construction proposes and raises a number of key solutions.

The first,Urgently research and complete the legal system related to the real estate sector such as: Land Law, Investment Law, Housing Law, Real Estate Business Law, Bidding Law, Construction Law, Urban Planning Law... to ensure consistency, remove difficulties and obstacles, create a legal framework and conditions for the real estate market to develop stably, healthily and sustainably; at the same time, strengthen management of the real estate market; increase supply, especially create conditions to promote the development of social housing, housing for industrial park workers, housing for the low-income segment...

Monday,Closely monitor the situation and developments of the real estate market to promptly take measures to stabilize and make the market healthy when necessary. Check and review housing projects and real estate businesses to promptly remove obstacles in investment procedures, land, planning, construction, etc., promote implementation to create supply for the market.

Tuesday,Review and supplement planning, allocate sufficient land fund to develop social housing and housing for workers in accordance with regulations. Promote renovation of old apartments.

Wednesday,Control and restructure real estate credit to ensure proper use and avoid risks. At the same time, continue to facilitate lending to the real estate sector in accordance with legal regulations; continue to lend to projects with full legal status and effectiveness; prioritize lending to licensed and commenced commercial housing, social housing, and worker housing projects to create supply for the market. Regarding this solution, the Minister pointed out the need to strictly control the issuance of real estate corporate bonds (especially individual bonds).

At the same time, guide the implementation of bond issuance and capital mobilization activities on the stock market of real estate enterprises in accordance with regulations, create conditions, and not hinder capital mobilization activities of enterprises with sufficient capacity, good business operations, efficiency, and health...

Research and propose tax regulations on real estate use, transactions and real estate business to limit speculation and hoarding of real estate.

Research, review and amend regulations related to land use rights auctions and determine land prices to ensure consistency and suitability to local realities.

Thursday, urgently organize the establishment, appraisal and approval of urban and rural construction planning, land use planning and plans, and develop housing development programs and housing development plans in localities; to strengthen local state management of planning, construction, real estate market and land management in localities to have measures to manage and prevent illegal subdivision, subdivision and sale of land plots, non-compliance with planning, no infrastructure investment, and no investment permission. Strengthen control of real estate trading floors and real estate brokerage activities for timely correction.

Friday,Complete and publicly implement the information system on housing and real estate market.

Saturday, inspect, examine, and strictly handle violations of the law in real estate business activities; handle acts of providing inaccurate information, causing disturbance, and negatively impacting the activities of the financial market and real estate credit.

Eighth,Implementing the direction of the Prime Minister, the Ministry of Construction is actively coordinating with ministries and branches to prepare for a conference on real estate market development.

Minister Nguyen Thanh Nghi said that the Ministry of Construction is urgently focusing on researching and evaluating the current state of the real estate market, results, limitations, shortcomings and causes; synthesizing international and domestic experiences; forecasting the situation, influencing factors, market development trends; determining goals, requirements, proposing mechanisms, policies and solutions for the real estate market so that the market can develop healthily, effectively and sustainably.