Social housing could be the solution to driving the real estate market out of this difficult time caused by the COVID-19 pandemic, according to the Ministry of Construction.

Buyers of a social housing project in Nha Trang complete procedures
to receive their apartments. (Photo: VNA)

Director of the ministry’s Housing and Real Estate Management Department Nguyen Trong Ninh said the pandemic had revealed limitations in the real estate market. 

Ninh said the market was suffering from the impacts of COVID-19, and around 80% of brokerage companies had closed. The number of new firms operating in the real estate sector had dropped by 11.9%, while the number of firms that had halted operations in the first quarter was up 94.1% on-year.

The ministry said the property market would continue to face difficulties in the remaining months of this year with declines in transactions and supply.

These difficulties have been caused by the economic slowdown, bottlenecks in granting licences for new projects, tightened credit for real estate, and declines in the services and tourism industries that have taken a hit from COVID-19 since the start of the year.

The ministry said that housing prices remained unstable and unaffordable to the majority of people. At the same time, speculation had significantly inflated housing prices.

According to Le Hoang Chau, President of the HCM City Real Estate Association, the market was quiet in the first quarter and had nearly frozen in April. Transactions fell by 70% and revenue by 80%, resulting in exhausted liquidity.

Chau said that both property developers and home buyers had fallen into difficulties due to COVID-19.

Nguyen Tran Nam, President of the Vietnam Real Estate Association, said that focus should be placed on developing social housing projects to create an impetus for the market to overcome this difficult time.

Careful evaluation of the impacts of the COVID-19 pandemic was needed, especially in Hanoi and HCM City, to support the market, Nam said.

At the ministry’s meeting late last week to discuss solutions to support the real estate market, experts urged the ministry to ask the Government to postpone land use fee payments, tax reductions for real estate companies and lower lending interest rates.

More capital

The Government has decided to allocate VND1 trillion (US$43.1 million)  for the Vietnam Bank for Social Policies and VND2 trillion for four commercial banks to provide loans for social housing development.

These loan packages are expected to help increase capital for social housing development, after a VND30 trillion loan package with preferential rates ended in 2016.

According to Ninh, the ministry was developing criteria for those eligible to borrow money from the package to speed up disbursement. The ministry would submit proposed amendments to Decree 100/2015/ND-CP about social housing development and management to the Government for promulgation in the fourth quarter of this year.

The ministry’s statistics showed that within the housing development programme for low-income earners in urban areas and workers in industrial zones, 207 projects had been completed with more than 85,000 apartments. Another 220 projects with 179,640 apartments are under construction.

However, this was only equivalent to 34.3% of the national housing development programme to 2020, which set a target of 12.5 million sq.m of new social housing by the end of this year.