Real estate highlights in 2023: A year of untangling

Series of policies issued

The real estate market since the end of 2022 has faced difficulties in many aspects, from project legality to bond capital, bank loans... To resolve these problems, in 2023, the Government has issued many timely instructions and policies to revive the market.

In March, Decree 08 of the Government was issued, supplementing the regulation: For bonds offered in the domestic market, in case the issuing enterprise cannot fully and timely pay the principal and interest of the bond in Vietnamese Dong according to the announced issuance plan, it can negotiate with the bond owner to pay the principal and interest of the bond due with assets.

This regulation is the basis for businesses to defer debt, sell assets at a discount, and pay principal and interest on maturing bonds with other assets such as real estate.

Decree 33 of the Government on a number of solutions to remove obstacles and promote the safe, healthy and sustainable development of the real estate market was also issued in March. Most notably, the State Bank was assigned to take the lead in implementing a VND120,000 billion credit program for social housing and housing for low-income people.

The main force of this program is 4 state-owned commercial banks (Agribank, BIDV, Vietcombank, VietinBank) providing loans to investors and home buyers of social housing projects, worker housing projects; projects to renovate and rebuild old apartments with preferential interest rates.

Điểm nhấn bất động sản năm 2023: Một năm được gỡ vướng - 1 — The real estate market will be unblocked by many positive policies in 2023 (Illustration: Hai Long).

While the market is reflected to have a supply imbalance, with high-end housing overwhelming while housing for low-income people is "extinct", the Government has promptly issued Decision 338 approving the project to invest in building at least 1 million social housing apartments for low-income people and industrial park workers in the period of 2021-2030.

Accordingly, by 2030, the total number of apartments completed in localities will be about 1 million, including the completion of about 428,000 apartments in the 2021-2025 period. The project aims to develop social housing and worker housing at prices suitable to the affordability of middle-income and low-income households in urban areas and of workers and laborers in industrial parks and export processing zones.

Another bright spot is that at the end of November, the National Assembly voted to pass the amended Housing Law and the amended Real Estate Business Law, which will take effect from 2025. Experts say that for the first time in history, two laws related to the real estate market were issued at the same time. If the amended Land Law is passed in 2024, the real estate market will have many more positive points.

In addition, the Prime Minister and many ministries and branches also continuously held online meetings with real estate businesses to remove legal obstacles for projects; met with the banking sector to propose solutions to support businesses in terms of capital, reduce lending interest rates, and stabilize business activities.

The market reacted positively.

Although experts believe that the real estate industry may recover from mid-2024, when the policy has had enough time to "absorb", in reality, many positive signals from the market have appeared. Thanks to the Government's policy of removing obstacles on real estate bonds, many businesses have been able to extend and postpone bond maturity dates, using assets to make payments such as Novaland, Hung Thinh...

Sharing at the discussion in early December, Mr. Nguyen Hoang Duong, Deputy Director of the Department of Finance for Banks and Financial Institutions (Ministry of Finance), said that about 40% of the volume of overdue bonds of 68 enterprises have had negotiation plans so far. The successful negotiation rate increased from 16% in February to 63% in October. In addition, enterprises that have arranged financial resources have proactively bought back bonds before maturity.

Also according to data from the Ministry of Finance, if there was no corporate bond issuance in the first quarter of this year, by the end of November, the amount of individual corporate bonds issued would have reached VND220,000 billion.

Capital flows into the real estate sector have also increased thanks to more flexible credit policies. According to the latest updated data from the State Bank, as of September 30, total outstanding credit for the real estate sector reached VND2.74 trillion, up 6% compared to the beginning of the year.

Điểm nhấn bất động sản năm 2023: Một năm được gỡ vướng - 2 — (Illustration: Quang Anh).

Lending interest rates have gradually cooled down as requested and directed by the Prime Minister and the State Bank. Many banks have lowered lending rates for commercial housing by 5.5-7.5% per year for the first 12-18 months, then applied floating interest rates of around 9.5-11% per year. Surveys show that home loan interest rates at many commercial banks have decreased by around 1-3% per year compared to the beginning of the year.

Regarding social housing policy, according to the Ministry of Construction, in 2023, localities across the country started 10 social housing projects and housing for industrial park workers with a total of over 19,800 units. Of which, Hai Phong City is the locality with 4 social housing projects started with a total of over 6,700 units. Hanoi City, Thua Thien - Hue Province and Lam Dong Province each have 1 social housing project started.

However, the disbursement of the VND120 trillion credit package for social housing and low-cost housing has not met expectations. The Ministry of Construction said that about 23 localities have announced a list of 54 projects eligible for loans under the VND120 trillion credit program with a capital demand of VND25,884 billion. Up to now, the disbursed amount has only been over VND143 billion.

According to the Ho Chi Minh City Real Estate Association (HoREA), the VND120,000 billion credit package applies a preferential loan interest rate of 8.7%/year for investors and 8.2%/year for home buyers until June 30.

From July 1, every 6 months, the State Bank will announce the preferential lending interest rate to commercial banks participating in the program. When the preferential period ends, the lending interest rate will be negotiated and agreed upon by the bank and the customer.

HoREA believes that the lending interest rate, which is 1.5-2% lower than the normal commercial loan rate, is still higher than the previous social housing loan rate. The preferential period is also short (5 years) and the interest rate is adjusted every 6 months, causing insecurity for borrowers.

Source