Brighter hope for late 2023

As the output of many production and business sectors and an essential infrastructure for a number of key economic sectors, the recession of the real estate market is seriously affecting other industries.

Identifying difficulties

Vietnam's economy is in the recovery phase after Covid-19, however, the complicated fluctuations of the world economic situation and some internal difficulties of the economy have seriously affected the growth rate of the real estate market. Identifying the most difficult problems of the market today, many experts believe that capital and legal issues are the main reasons why new projects are not approved.

According to reports from banks, credit growth for the real estate market has not shown signs of recovery, reaching only 1.6% in the first quarter of 2023. The pressure on bond maturity is large, with up to VND 225 trillion in bonds due for payment, of which real estate accounts for more than VND 100 trillion. The peak is in the third quarter of 2023, with up to VND 91 trillion in corporate bonds due for payment of both principal and interest.

Many real estate project investors have confidently reopened for sale.

For real estate businesses, this is a difficult problem because the real estate market is in a "frozen" phase, so when the bond matures, it is very difficult for businesses to mobilize resources to pay off debts. Currently, many real estate businesses have had to accept selling housing products at a loss but still cannot find investors.

Another internal problem of the real estate market is legal problems in real estate projects. The Ministry of Construction said that in 2022, new licensed real estate projects decreased sharply compared to 2021. This causes the real estate supply to continue to be limited in 2023. Currently, the supply being traded on the real estate market is the remaining inventory of projects that were opened for sale before. The report of the Ministry of Construction shows that in the first quarter of 2023, the whole country had only 14 completed commercial housing projects. Of which, the North had 9 projects with 5,679 units, the Central region had 3 projects with 137 units, and the South had 2 projects with 93 units.

Mr. Ha Quang Hung - Deputy Director of the Department of Housing and Real Estate Market Management (Ministry of Construction) assessed that many projects encountered difficulties, obstacles, and slow implementation due to regulations on land valuation methods that made it difficult to determine what the "market" price was, accounting for over 50% of the problems of the projects. In addition, many cases of land use planning have been announced but there is no annual land use plan at the district level and other problems related to land use conversion, enterprise equitization, land allocation, public land interspersed in the project, etc.

Some projects with 1/500 detailed plans that have been approved but are not in compliance are being reviewed, adjusted, and updated according to regulations. Many bottlenecks in legal procedures have caused project implementation to be delayed, construction time to be extended, and costs to increase.

Many solutions

Faced with the reality that the real estate market is facing many difficulties from the domestic and foreign economy, although management agencies have proposed many solutions, according to real estate businesses, this needs to be implemented more drastically so that the solutions can be put into practice.

Mr. Nguyen Van Dinh - Chairman of the Vietnam Real Estate Brokers Association said that the current corporate bond credit issues and legal policies are major barriers with 1,000 projects across the country being suspended. Many real estate projects cannot be implemented despite having completed procedures at many stages such as selecting investors, bidding, auctioning, land allocation, calculating land use fees, licensing... The process is "stuck" at many stages.

Recognizing the difficulties of the market, the Government has directed ministries and branches to continuously propose solutions to overcome them. In December 2022 alone, the Prime Minister signed 3 consecutive Official Dispatches to handle urgent issues, including many contents to solve problems for the real estate market such as: providing credit capital for the economy, corporate bond market, real estate market and housing development...

Continuously in March and April, the Government issued important directive documents such as Resolution 33, Official Dispatch No. 178 and Decree No. 10 to promote and remove obstacles for the market.

Most recently, Deputy Prime Minister Tran Hong Ha signed and issued Official Dispatch 469, emphasizing the following requirements: Perfecting laws on land and real estate; Creating favorable conditions for real estate project investors and home buyers to access credit sources; Removing difficulties and obstacles in determining land prices, planning, and land use plans...

Recently, the Prime Minister's Working Group has worked specifically on a number of large projects, typically in Dong Nai, Ho Chi Minh City, Binh Thuan... to identify obstacles and focus on removing them. Enterprises expect the bottlenecks to gradually be removed, increasing supply.

With a series of supports as above, according to market records, since the beginning of the second quarter, the real estate market has been "stirring" again. Some projects of large investors, in prime locations in some economically developed provinces and cities have opened for sale, bringing with them brighter hopes at the end of 2023.

Source