Overlap between existing laws
At the discussion within the framework of the Forum "Sustainable Development of Real Estate Market and Awarding of Livable Project Certificates 2023", Dr. Nguyen Van Dinh - Chairman of the Vietnam Association of Real Estate Brokers (VARS) shared that currently, the real estate market is facing a shortage of social housing and low-cost commercial housing.
Besides the problem of scarcity of affordable housing supply, there are also some problems such as lack of mechanism and determination of many localities, leading to the situation that many projects have not been resolved, real estate businesses still have to face many difficulties.
Accordingly, despite very good market demand, there is still a decline in real estate transactions, recorded as a decrease of more than 90% because investors are facing the problem of "burying" capital and having to solve financial challenges.
Dr. Nguyen Van Dinh - Chairman of Vietnam Real Estate Brokers Association.
In that context, the Chairman of VARS said that the efforts of the Government and relevant ministries in issuing many policies to remove difficulties in the real estate market have had a positive impact on the market.
According to Mr. Dinh, in the first quarter of 2023, there were nearly 3,000 successful real estate transactions and in the second quarter of 2023, this number increased by 30%. Up to now, investor confidence has gradually recovered, many new projects have started to open for sale on the market, leading to an increase in the number of real estate transactions.
However, the expert assessed that the improvement in new housing supply and the stability of buyer psychology are still taking place slowly, requiring more time to complete new projects. At the same time, although investor psychology is gradually stabilizing, it is still quite cautious, especially those facing financial pressure from previous investments.
Regarding the reasons why the real estate market is currently in difficulty, Mr. Nguyen Quoc Hiep - Chairman of the Vietnam Association of Construction Contractors (VACC) said that the biggest problem that the real estate market is facing is legality.
Mr. Hiep explained that currently, there are 12 laws directly affecting real estate alone, and if expanded to indirectly affect, there are up to 20 laws such as: Law on Planning, Law on Fire Prevention and Fighting, etc. Therefore, to solve difficulties for the market, there must be a synchronous and fundamental solution to untangle the Laws.
"Especially according to State regulations, ministries are responsible for making laws under their management, but there is no unified mechanism among ministries. Therefore, although the implementation process is very good, the process of making laws still has overlaps," said Mr. Hiep.
Mr. Nguyen Quoc Hiep - Chairman of Vietnam Association of Construction Contractors.
In addition, the reception of comments during the process of drafting the Law, according to Mr. Hiep, is still limited. Taking a practical example, the Chairman of VACC said that the recently passed Law on Bidding has shown some shortcomings, and in the coming time, the Association will make recommendations to the management agency.
"Businesses want laws to have a longer lifespan instead of being short-term like they are now. Especially if the law is wrong but it takes 10 years to be amended, businesses will not have a legal corridor to carry out business activities," said Mr. Hiep.
Accordingly, Mr. Hiep pointed out 4 issues in the law that need special attention from the Government: site clearance; planning, land valuation and land use conversion. Mr. Hiep said that the law only needs to focus on the issues mentioned above to solve the market.
Sharing his own story, Mr. Hiep said that he had been developing the project for 12 years but still could not complete the site clearance. The prolonged delay forced him to continuously meet with provincial leaders to work, the number of times he went to work was so much that Mr. Hiep received the local people's comment "I feel ashamed to see you", but the site clearance mechanism was still not handled by anyone.
Vietnam's real estate market is currently experiencing an imbalance between supply and demand (Photo: Huu Thang).
Besides, the issue of administrative procedures is also one of the problems that the Chairman of VACC considers to be the core problem causing difficulties for businesses today. The Ministry of Construction's plan to handle the simplification of administrative procedures and some related policies is very practical.
Mr. Hiep affirmed: "Vietnam's real estate has great potential, but administrative procedures are like a net. The Prime Minister has given instructions on reducing and simplifying administrative procedures, but the current administrative procedure processing process is still lengthy, requiring a revolution... If this can be done, it will also be one of the practical solutions to support businesses and promote the current real estate market."
Supply-demand imbalance
Sharing more about the issue of capital sources for real estate businesses, Dr. Le Xuan Nghia - Member of the National Financial and Monetary Policy Advisory Council said that the real estate market crisis had been predicted by experts in advance but could not be avoided.
According to the expert, real estate is a long-term essential product, so when supply and demand are out of balance, a crisis will occur. However, the previous crisis was oversupply, while this one is a shortage crisis. In addition, businesses are facing a serious shortage of capital, unable to open more projects, and the market has "frozen".
“We are watching to see if market confidence recovers when real estate corporations and businesses issue bonds. Most recently, the largest real estate corporation in the country issued bonds without any outstanding bank debt. We are holding our breath to watch, but the results show that the market is only “creeping” and “cautiously” recovering about 30% compared to expectations,” said Dr. Le Xuan Nghia.
According to the expert, the entire economy is currently stagnant, liquidity is facing serious difficulties in many industries, not just real estate. With these comments, Mr. Nghia believes that the real estate market may face difficulties until the second and third quarters of next year.
“We have not entered the “eye of the storm”, we have not pushed up the supply of low-cost housing, so we have not solved the problem. How can businesses enter low-cost housing “freely”. It is necessary for the Government to regulate the price range for low-cost housing like in China, to avoid discouraging low-cost housing investors. We have not created a level of real estate housing prices, so we have not solved the market crisis”, the expert said .
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