Apartment blocks in Hà Nội. Experts are concerned that affordable housing has been declined steadily in recent years. VNA/VNS Photo Danh Lam

HÀ NỘI — The government has taken timely measures to support the realty market during tough times, according to Vương Duy Dũng, deputy director of the Housing and Real Estate Market Management Agency.

Dũng was speaking at the workshop 'Measures to ease the difficulties facing the realty market and the market outlook in 2023' on January 13.

The deputy director said the Prime Minister had issued various legal documents to lift the market out of difficulties, including Decision No.1435 and Official Dispatch No.1164. 

Under the decision, a team led by the Ministry of Construction has been established to report on obstacles holding back local realty projects. In two weeks, the team has travelled across five provinces and met 30 realty firms to take stock of their situation.

After the team reported to the Prime Minister on the local situation, the Government, through the issuance of the official dispatch, swiftly assigned local authorities the task of removing the obstacles in the way of local firms. 

Lê Hoàng Châu, chairman of the HCM City Real Estate Association, remarked that the realty market had encountered various obstacles, of which 70 per cent center around legal gaps. Others involve the tightening of bank credit and corporate bonds.

Meanwhile, the supply-demand imbalance has become more evident in recent years. In HCM City, affordable housing took only 1 per cent of the market in 2020. One year later, the tiny market share diminished, and affordable housing was nowhere to be found.

The low-end segment vanished to give way to luxury real estate, which rose from 70 per cent in 2020 to over 80 per cent in 2022. Realty prices were pushed up to such a high level that apartments of VNĐ35 million (US$1,493) or less per sqm became a thing of the past.

In the face of the situation, the Government has held 17 meetings since June 2021 to discuss measures to fix the legal gaps holding back the market.

Between December 12 to 15, 2022, the Prime Minister proceeded with four official dispatches to deal with other obstacles, including those related to bank credit, corporate bonds, and labour.

On January 6, 2023, the Government doubled down on its effort by issuing Resolution No.01, which put the stability of the realty market high on its agenda for 2023.   

As the favourable policies need some time to take root, the chairman called for easier-to-access bank loans to realty firms to keep them afloat for now.

He said the State Bank of Vietnam had uplifted the caps on credit growth but about 1.5 to 2.0 per cent of the credit had not reached the economy. That means some firms were unable to access the preferential credit.

Economic expert Võ Trí Thành urged the Government to improve market transparency and take three measures to get the realty industry back on track.

The first measure involves making bank credit accessible to realty projects which are up to certain not-so-strict standards. The second measure is to allow realty firms to issue corporate bonds and use the proceeds to pay back their debts.

The last measure centres around reducing housing prices to make them affordable for a majority of homebuyers, plugging the supply-demand gaps. The measure requires a top-down approach, from macroeconomic policies to corporate policies, to get results.

Nguyễn Quốc Hùng, general secretary of the Vietnam Bank Association, revealed that real estate is deemed to be a risky industry to which banks are cautious in making loans for fear that their loans would fuel housing bubbles.

As such, bank loans have been made available only to projects with adequate legal dossiers and plausible profit prospects. Those failing to meet the criteria are likely to be rejected by banks, leaving their developers with no choice but to fend for themselves financially.

"Those firms should lower their profit margins to boost sales because higher sales create cash flows," said Hùng.