Businesses urged to reduce housing prices and lower profit expectations
The Ho Chi Minh City Real Estate Association (HoREA) has just issued a document requesting real estate businesses to implement the Prime Minister's opinion: to restructure the market segment and reduce housing prices to suit people's incomes to join hands to solve difficulties, helping the market develop safely, healthily and sustainably.
The association found that businesses "have not yet been actively deployed" as the Prime Minister commented. Meanwhile, since 2018, the association has issued a document recommending that businesses shift their investment to the affordable small and medium-sized apartment market segment that meets real housing needs, has high liquidity and is sustainable.
The association recommends that real estate businesses reduce housing product prices, reduce profit expectations, and not "keep prices high".
At the same time, businesses increase discounts and have promotional and after-sales policies to stimulate consumer demand in the real estate market to increase market confidence, create cash flow and liquidity for businesses, following the experience of "it is better to sell at a loss than borrow at a profit".
The association recommends that businesses should shift their investment to the affordable housing segment that is suitable for people's income. Businesses also participate in the program to develop at least 1 million social housing apartments in the 2021-2030 period to be able to access the VND120,000 billion credit package with interest rates 1.5-2% lower than normal commercial interest rates.
Ho Chi Minh City Real Estate Association recommends businesses reduce housing prices (Illustration photo: Quang Anh).
The emergence of self-branded high-end projects
For high-end housing projects and mid-range housing projects, some investors have reduced selling prices, but the level of reduction is not significant. Investors mainly implement discount and promotion policies, and after-sales services that are beneficial to customers to "try to maintain prices".
Because construction costs, materials, labor, financial costs, management costs all increase and there are also "unnamed costs".
Some projects that have been approved and implemented initially have affordable and mid-range housing projects, but the investor has "retouched" them and turned them into higher-end housing projects, or even "inflated" them into high-end housing projects to maximize profits.
Therefore, the real estate market is lacking affordable housing that is suitable for people's income. At the same time, the market is also lacking social housing because the investment in the construction of social housing projects also encounters legal problems, and the investment procedures for the construction of social housing projects are even more difficult than those for commercial housing projects.
The Association recommends that competent State agencies focus on removing legal obstacles to increase the supply of housing projects in the market, which is the basis for increasing the supply of affordable housing and social housing. This increase in housing supply will help stabilize housing prices according to the law of supply and demand and the law of market competition.
At the same time, the Association proposed that the Ministry of Construction soon submit to the Government detailed regulations on "stages of housing construction investment projects" to standardize the administrative procedures for reviewing and approving commercial housing projects and social housing projects to shorten the time for implementing investment procedures using land.
The Association proposed that the National Assembly Standing Committee consider completing the Draft of the revised Land Law to develop mechanisms and policies on effective and economical land use to implement real estate projects.
This will create favorable conditions for investors to access land, ensure correct and sufficient collection, avoid loss of state budget revenue, avoid loss of public assets such as land resources, and create a transparent investment environment.
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