Viet Nam’s strong economic growth since 2015 has pushed the domestic property market into a thriving and stable development period. The country’s real estate market is expected to maintain growth rate during 2018, said Pham Hong Ha, minister of Construction.

Ha told the first annual Viet Nam Real Estate Forum held in Ha Noi on Wednesday, that the real estate market has seen developments that have significantly contributed to the country’s socio-economic development.

“The segments of land and small-and-medium sized apartments would have changes, in term of prices in some areas. Meanwhile, resort properties will continue to develop,” he said.

However, he said the market has not been synchronous and displays a lack of transparency, along with risks. Further, part of the real estate market has been dominated by group benefits.

Currently, investments for property trading have not been diversified, and they mainly come from credit institutions, bank loans and mobilising from home buyers. The investors’ ownership capital has remained low, while some large estate developers use bank loans through their subsidiaries, thus causing difficulties for controlling credit in the real estate sector.

“The structure of property products has not been suitable or closely managed. The supply of hi-end estate segments has been higher than demand, while lacking in commercial and social housing projects,” the minister added.

In addition, he said, the State management agencies have not developed policies to respond to changes in the market. Also, the Government has not had adequate policies regarding taxes, credits and land, to regulate resources for the property market development, and has not encouraged social housing projects.

Nguyen Tran Nam, chairman of the Viet Nam Real Estate Association (VNREA), agreed, saying that the estate market would be more stable next year.

“The association has not provided warnings on speculation. The speculation would be seen when there was a lack of products, as well as some surplus, which raises prices. However, the country’s supply of property in the market has been abundant,” Nam said.

Statistics indicate that Ha Noi has some 20,000 apartments for sale. In total, the capital and HCM City has 45,000 to 50,000 apartments that are being offered for sales in the market, while consumption results in only 30,000 sales per year. Therefore, the market has enough apartments to meet current demand.

Nguyen Trong Ninh, director of the ministry’s Department of Housing Management and Real Estate Market, said resort properties have been an important issue in the market in recent years. The property includes some seaside localities, such as Da Nang, Nha Trang - Khanh Hoa and Phu Quoc - Kien Giang, which have been developed and are attracting investments from both local and foreign investors.

The resort projects have been developed as villas for sale and rent, as well as condotels.

Credit in estate under control

Outstanding loans in the property sector have followed the Government’s orientation and the market’s real demand. By the end of July, outstanding loans in the sector rose 4 per cent from last year, and accounts for 9 per cent of the country’s total outstanding loans.

“The portion has been stable since 2013. The loans in the estate sector have focused on apartment projects, which are suitable for people’s demand,” said Nguyen Quoc Hung , director of the Credit Department under the State Bank of Viet Nam (SBV).

In addition, the central bank has asked credit institutions to actively resolve bad debts, especially in the property sector. The bad debt rate in the sector was sharply reduced from 7.05 per cent in 2013 to 4.06 per cent in 2017.

Hung said the SBV would continue to stabilise the monetary market, while closely supervising credit in the estate sector to ensure effective and sustainable credit growth.

He proposed to continue renewing and improving planning, while shortening the time for approving social and commercial housing projects. Meanwhile, the policies for these new types of properties, such as condotels and officetels, should be completed.

He said the Government also warned about heated growth in the market. The asset mortgage would be tightened to ensure the rights of home buyers. Further, banks would lend less than 70 per cent to property developers, and would not be allowed to use those loans to invest in other sectors.

Economist Le Xuan Nghia said he believed that financing for social housing projects has been a painful issue, as it mainly comes from bank loans.

“Bank loans should not be a long-term solution, as they cause pressure on the banking sector. I think the Ministry of Construction should study experiences from other countries in mobilising resources. This could include the establishment of a fund for social and inexpensive housing projects,” he added.

VNREA’s vice chairman, Nguyen Manh Ha, said social housing projects have been mostly located in big cities, such as Ha Noi and HCM City.

The projects should be set in locations that are not too far from the centres, and receive support through taxes and prices.

Ha said the establishment of the fund would be difficult due to income issues, as low and middle income residents would find it difficult to contribute to the fund.

“The issue is that each locality should have their own solution to resolve the problem,” he said.

The forum, organised by VNREA in co-operation with financial-economic channel VITV, is a large event that will assess the real estate market in a comprehensive manner, from commodities and segments to housing-related issues, such as land, finance, credit and tax. — VNS