Hanoi (VNA) - Strong economic growthsince 2015 has created a thriving domestic property market that is likely tocontinue next year, said Construction Minister Pham Hong Ha.

The Minister told the first annual Vietnam Real Estate Forum in Hanoi this weekthat the market’s growth had made significant contributions to the country’ssocio-economic development.

“Upbeat signs have been seen in the market index. Property inventories havefallen sharply due to growing housing demand, while the flow of direct andindirect foreign investment into the sector has soared,” he said.

The property market’s recovery has also bolstered the financial-securitiesmarket and other related industrial sectors, such as construction and buildingmaterials, the Minister said, predicting that resort properties would alsocontinue to develop.

However, he said the market had displayed a lack of transparency. Further,parts of the real estate market had been manipulated by those with vestedinterests.

Most investment in property projects had come from credit institutions, banksand by mobilising home buyers.

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

In addition, he said, State management agencies had not developed policies torespond to changes in the market. Also, he claimed the Government had not hadadequate policies regarding taxes, credits and land, to regulate resources formarket development, and had not encouraged social housing projects.

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

Statistics indicate that Hanoi has some 20,000 apartments for sale. In total,the capital and HCM City have 45,000 to 50,000 apartments that are offered forsale in the market, while consumption results in only 30,000 sales per year.

“Therefore, the market has enough apartments to meet current demand,” Nam said,adding that there is no speculation in the market.

Nguyen Trong Ninh, director of the ministry’s Department of Housing Managementand Real Estate Market, said the property market continued to see stablegrowth, including in resort properties at Da Nang, Nha Trang – Khanh Hoa  and Phu Quoc – Kien Giang, which wereattracting investments from local and foreign investors.

Credit in estate under control

Outstanding loans in the property sector are in line with the Government’sorientation and the market’s real demand. By the end of July, outstanding loansin the sector rose 4 percent from last year. Property loans account for 9 percentof the country’s total outstanding loans.

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

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

Hung said the SBV would continue to stabilise the monetary market, whileclosely supervising credit in the estate sector to ensure effective andsustainable credit growth.

He proposed to continue renewing and improving planning, while shortening thetime for approving social and commercial housing projects. Meanwhile, policiesfor these new types of properties, such as condotels and officetels, should becompleted.

He said the Government was also on guard against speculation-driven growth inthe market. Further, banks will not issue loans worth more than 70 percent ofa project to property developers, and investors must use the loans to investonly in the project for which they received the loan.

Economist Le Xuan Nghia said he believed that financing for social housingprojects has been challenging, as it mainly comes from bank loans instead ofnon-profit or Governmental resources.

“Bank loans should not be a long-term solution, as they cause pressure on thebanking sector. I think the Ministry of Construction should study experiencesfrom other countries in mobilising resources. This could include theestablishment of a fund for social and inexpensive housing projects,” he added.
VNREA’s vice chairman Nguyen Manh Ha said social housing projects have beenmostly located in big cities, such as Hanoi and Ho Chi Minh City.

The projects should be set in locations that are not too far from the citycentres, and receive support through tax breaks.

Ha said establishing the fund could be difficult, as low and middle-incomeresidents would likely be unable to contribute to the fund. Deep-pocketeddonors would need to step up.

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

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