The Vietnamese government’s continued support of stimulus packages for the property sector is expected to offer more hope to property firms and buyers this year as the market begins its early-year recovery, the Vietnam Investment Review (VIR) reported.
In the latest report of the Ministry of Construction on the real estate market submitted to the prime minister, Minister Trinh Dinh Dung proposed that the government solutions to stimulate the market be continued with further adjustments to ease access to credit for the purchase of social housing.
The minister specifically requested that cities and provinces refuse the go-ahead of new commercial housing developments and that any final decision on such cases should rest with the prime minister.
The ministry also agreed with the state bank’s proposal that the deadline for housing loans sourced from the government’s 30 trillion VND (1.4 billion USD) real estate market stimulus package will be extended from an original 10 to 15 years for repayments. The package will be expanded to include owners of social housing contracts signed before January 7, 2013, but which have yet to conclude payments on their instalments.
The ministry also proposed to expand the package to include customers wanting to purchase commercial housing worth 1.05 billion VND (47,000 USD) per unit and expand the number of commercial banks able to apply the package. Currently, only five commercial banks, the Bank for Investment and Development of Vietnam, Vietinbank, Vietcombank, Agribank and the Housing Bank of Mekong Delta, have implemented such loans after the government officially approved the package on June 1, last year.
Tran Nhu Trung, deputy general director of Tan Hoang Minh Group told VIR that the support policies are welcome as they help both property developers and potential buyers. However, the important point now is to ensure that the myriad number of social housing projects facing stagnation can now access preferential funding. The new support policies will also provide more opportunities for buyers.
According to Trung, the ministry’s proposal to stop granting the go-ahead for commercial housing and new urban projects was based on fundamental oversupply in the market. Trung showed that demand in the fourth quarter of last year absorbed just 10 percent of the newly released commercial property developments.
“Very few financially strong investors want to change their commercial housing into social housing as it is very difficult for them to make a profit,” Trung claimed.
Nguyen The Chinh, deputy director of Viglacera Infrastructure Development and Investment Company, the developer of six social housing blocks in the Dang Xa urban area in Hanoi told VIR that the new proposal will receive a positive response as many low-income earners are struggling to own their own homes due to difficulties in accessing loans.
Chinh added that thanks to the current support policies, Viglacera performed well last year and plans to kick off two new social housing projects in April.
The latest ministry report on the local real estate market during the first two months of this year submitted to the prime minister revealed positive results. About 1,300 units were sold in Hanoi while 1,000 units in Ho Chi Minh City.
Outstanding loans to the real estate market also registered significant changes. Specifically, scores of banks opened preferential loan packages to bolster real estate transactions and outstanding loans to the sector in 2013 increased 14.7 percent year-on-year.
Minister Dung said the figures for the first two months implied a more healthy market, while stable prices were attracting buyers.
The total value of property inventories in the country was valued at 93 trillion VND (4.4 billion USD), down 1.87 percent compared to late last year, the report stated. Apartments accounted for 19,210 units, equal to 28.6 trillion VND (1.2 billion USD) while houses totaled 13,516 units, worth 24 trillion VND (1.1 billion USD).
In Hanoi, unsold housing stocks were valued at 12.6 trillion VND (600 million USD), down 2.8 percent compared to late last year, with apartments accounting for 3,164 units, down 294 units compared to the end of 2013, while houses reached 3,096 units, down 26 units compared to late 2013. The areas include Co Nhue, 505 Minh Khai and Dolphin Plaza. Apartments for sale projects in Trung Hoa- Nhan Chinh area are the main highpoints for sales.
The ministry said that housing inventories in Hanoi are located mostly in projects on the outskirts of the city, with areas mostly characterised by incomplete infrastructure. Le Trong Tan new urban project in Ha Dong, Gamuda- Yen So Gardens, Nam An Khanh urban project are all victims of this. Apartments valued at over 100 million VND (4,700 USD) per square metre also account for a large proportion of housing stock.
Meanwhile in HCM City, the total value of the city’s unsold housing stock reached 16.7 trillion VND (800 million USD), down 4.32 percent compared to late last year. Unsold apartments account for 7,520 units, equal to 13 trillion VND (618 million USD), down 310 units compared to late last year, while unsold houses total 755 units, equal to 2.1 trillion VND (99.6 million USD), down 52 units compared to late last year.
Minister Dung said this year will also see the Construction Law, Housing Law and the Law on Real Estate Business, all help bring greater clarity to the real estate market.
The minister also revealed that even when the 1.4 billion USD-support package was finally fully disbursed, there was still a raft of credit programmes and offers from other financial institutions that will help ease the difficulties people were facing in buying low-cost social housing.