The real estate market has potential destabilizing factors, from the risk of a bubble to recession and a lack of supply in all segments, especially low-cost housing, according to the Ministry of Construction.
In a report sent to the Economic Committee, the Ministry of Construction said that the supply of real estate and housing remained limited in the second quarter when the number of completed projects was only half that of the first quarter and about 29% compared to the same period in 2022. Many projects were stopped or delayed due to legal and capital difficulties.
Low supply, sluggish transactions. Citing data from localities, the Ministry of Construction said the number of successful apartment and individual house transactions was only 43% of the same period last year. Land transactions were more active, with about 67,500 successful transactions, but also decreased by about 68% compared to the second quarter of 2022.
"The real estate market still has potential destabilizing factors, from the risk of a bubble to recession, lack of supply in segments and a product structure that does not meet demand," the Ministry of Construction commented.
In addition, high prices have caused difficulties for buyers with real needs. Hanoi and Ho Chi Minh City recorded new apartment prices increasing again in the second quarter, despite signs of market slowdown.
In the resort real estate segment, prices are still falling due to high capital costs. In many localities, the Ministry of Construction said that the selling prices of villas and land plots have mostly decreased by 2-5% compared to the first quarter of the year. In particular, there are projects adjacent to shophouses that are being advertised for sale at 10-15% lower than the original price.
Real estate in Ho Chi Minh City, July 2023. Photo: Quynh Tran
Housing prices are not suitable for incomes and there is a lack of affordable housing, which was also commented by the Economic Committee - the National Assembly's inspection agency - when examining the implementation of the resolution on supervision and questioning at the beginning of the term in the construction sector. This agency pointed out that the market is mostly mid- to high-end housing, while the number of affordable products has decreased by about 4 times in the past 3 years. The Economic Committee also believes that the problems and difficulties of the real estate market can last for many years and cannot be resolved in the short term.
However, the Ministry of Construction said that many solutions have been implemented by the management agency to remove difficulties and promote the real estate market, especially the social housing segment. One of these is to amend legal regulations related to housing and real estate business. In particular, the social housing policy is recommended to the National Assembly to be allowed to take effect from the beginning of 2024, after the Housing Law (amended) and the Real Estate Business Law (amended) are passed by the National Assembly.
The Prime Minister's Working Group continues to work with localities (Hanoi, Ho Chi Minh City) to review and remove difficulties and obstacles of real estate projects. To date, the Working Group has received 108 documents reflecting difficulties and recommendations from localities and enterprises related to 168 real estate projects. These documents have been reviewed and processed by the Working Group according to its authority or sent to competent authorities for processing.
To increase the supply to meet the needs and income of workers, the Project to invest in building at least 1 million social housing apartments by 2030 has been accelerated by localities. To date, 20 social housing and housing projects for workers have been started, supplying the market with nearly 37,800 apartments. Of these, over 80% are social housing projects, with a scale of over 34,430 apartments, in localities such as Ha Nam, Binh Duong, Kien Giang, and Ho Chi Minh City. About 20% of worker housing projects are implemented in Quang Ninh, Bac Ninh, and Ho Chi Minh City with a scale of 3,360 apartments.
Regarding the VND120,000 billion credit support loan package, the Ministry of Construction informed that there are currently 21 social housing projects, housing for workers, and renovation of old apartments that are eligible for loans. These projects have a scale of 19,897 apartments, a total investment of VND20,179 billion, and a loan demand proposed by localities of nearly VND7,140 billion.
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