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VN: Property market anticipates recovery in 2014

Deputy Construction Minister Nguyen Tran Nam

Reporter: What is your assessment of the property market in 2013?

Nam: Over the past year, the real estate market has increased social and commercial housing supply in line with low income earning buyer demands.

Several real estate projects were altered to social housing developments to provide housing for poor people and alleviate market strain.

The country’s 124 social housing projects currently contain more than 78,700 apartments. Eighty-five were tailored to low income earners, the equivalent of 51,900 apartments, while another 39 (27,000 apartments) will be made available to workers in industrial zones. Total investment exceeded US$1.69 billion.

Authorities proposed converting 57 commercial projects into social housing, providing an additional 34,837 apartments with VND20.567 trillion in investment.

Real estate market transactions gradually increased as 2013 drew to a close, especially in small scale apartments sold at modest prices. 

As of late 2013, the total value of housing inventories was estimated at VND 94,458 billion. Value had fallen 26.5 percent from the first quarter of the same year.

But rising registration taxes and higher real estate credit growth also point towards a late 2013 rebound.

Incomplete housing projects proceeded to sale, consolidating customer trust in the market’s recovery. The recovery can be credited to the Government’s national housing development strategy and urban planning.

Reporter: What were the practical effects of the Government’s real estate market solutions?

Nam: Government’s Resolution 02 covers mechanisms and polices to control the property market in major cities like Hanoi and HCM City.

Hanoi has reviewed 15 project proposals for increasing the number of apartments from 5,478 to 10,587. Another 10 HCM City projects submitted proposals to increase the number of apartments from 4,655 to 9,052.

Demand-supply imbalances are a major market weakness.

The Ministry of Construction is currently guiding localities and investors through real estate restructuring.

The Government’s Decree No 188/2013, on the development and management of social housing, aims to increase social housing supply and regulate the property market.

Entering into effect on January 10, the decree exempts social housing projects from land use taxes.

Investors would enjoy additional benefits such as reductions or exemptions from, value-added and corporate taxes.

Enterprises joining the projects could apply for loans from credit institutions.

The decree stipulates commercial banks and credit institutions are responsible for reserving at least 3 percent of their total debt balance for social housing projects and offering assistance to low income earners at lower interest than market rates.

The State budget would support investors through land clearance and infrastructure upgrades.

Investors are allowed to issue Government-guaranteed bonds when arranging capital for their projects.

Further, the purchase of social housing will be transferred after 5 years of use, from the time of signing the contract with the investors.

In the last two weeks of 2013, VND170 billion of a VND30 trillion property market stimulus package was disbursed in the form of soft loans to home buyers and property developers.

The State Bank of Vietnam (SBV) committed VND 1.75 trillion in loans to 13 businesses and 1,764 home buyers by the end of 2013.

Commercial banks loaned VND304 billion to seven enterprises and 1,750 individuals.

Reporter: What will the Ministry of Construction do to alleviate the real estate market’s difficulties?

Nam: The Ministry will continue to work hand in hand with localities harbouring major real estate business projects to monitor the implementation of underway urban and housing developments and align new projects and local housing priorities.

Market complexities will force greater State and interested party effort to facilitate business activities, stimulate economic growth, and protect social security.

Urban and housing development regulations must be fine-tuned to ensure property market stability and balanced supply and demand.

The approach to easing property market problems should reflect the Prime Minister’s housing development strategy through 2020. The strategy rests upon providing quality housing at minimal prices and is especially focused on poor and low income households.

Housing programmes need to consider the special requirements of rural areas, those credited with revolutionary service, and the isolated elderly.

Reporter: What is your prediction for the real estate market in 2014?

Nam: Judging from the market changes seen in 2013, the property market will remain relatively stable.

Real estate will focus on supplying small and medium-sized apartments to meet buyers’ demands.

Reporter: Thank you very much.


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