After COVID-19, the real estate market declined as result of the shortcomings and limitations in the previous period were exposed under the pressure of the global pandemic. — VNA/VNS Photo Hồng Đạt

With the price hikes in the past few years, Hà Nội and HCM City apartments have become unaffordable for most of its citizens.

According to a recent report by the National Assembly’s supervision delegation on the real estate market laws, policies and social housing development, about 3,63 commercial housing and urban development projects were initiated in 2015-2023, covering a total area of nearly 11,200 hectares.

However, in 2022 and 2023, the real estate market declined as result of the shortcomings and limitations in the previous period were exposed under the pressure of the COVID-19 pandemic, leading to a limited supply.

During these two years, housing prices soared, exceeding the income increase of most people in the two most populated cities in the country.

Today, Hà Nội and HCM City no longer have a real estate market segment within the reach of most citizens, according to the report.

In 2022, Hà Nội saw a surge in its apartment prices. HCM City also reported price hikes and a sharp decline in real estate transactions, leading to a disparity between prices and values.

Notably, a significant number of housing projects were facing obstacles and delays during this period. With huge resources poured into these projects, this stagnation caused inefficiency in funding and land use, driving up sale prices.

Hà Nội has resolved 158 out of the 404 housing projects facing issues, while HCM City counts 220 projects in limbo.

In the past three years, real estate development in the capital city has been stagnant with no new projects approved for investment, the report said. Most of the residences on the market belong to projects approved in the previous period.

Meanwhile, approximately 800 social housing projects were initiated between 2015 and 2023, totalling 567,000 apartments.

Among these, 373 projects were completed, 129 began construction and 298 were approved for investment.

“In general, social housing laws and policies during 2015-2023 lack stability. Some of the key regulations for social housing development did not receive adequate attention or specific guidelines, resulting in difficulties for localities,” the NA report reads.

During this period, many localities failed to meet the deadlines for their social housing development programme.

The approval process for social housing beneficiaries and price evaluation often takes longer than scheduled, which greatly affects the investment cycle, capital recovery, interest payments for investors and public access to social housing.

“The average price for a social housing department remains too high compared to the income of intended beneficiaries.

“The financial support from State budget towards preferential social housing credit programmes is still inadequate, while the lending procedures are complicated and overlapping, and the maximum loan amount for social policy beneficiaries is limited and did not align with the actual situation,” the NA document reads.

The NA supervision delegation recommended that the government, along with relevant agencies, establish effective mechanisms to radically address stagnant real estate projects, thereby freeing up resources for the market and create momentum for socio-economic growth.

Authorities must also prevent the market from ‘overheating’ or ‘freezing’, which pose threats to the overall socio-economic development.

They also recommended diversifying real estate products, to balance supply and demand in alignment with the average income of the people and effectively deploy social housing development programmes with the allocated support package of VNĐ120 trillion (US$4.7 billion). — VNS