The government is working on many
packages of combined
relief solutions to help the local real estate market and related industries,
said a senior state official at a
recent National Assembly (NA) meeting in Hanoi.
The
Government and the Ministry of Construction are focused on building legal documents
related to real estate and urban development so that the local realty
market will come under strict supervision, said Construction Minister Trinh
Dinh Dung.
Unfeasible projects with no
cleared ground will have their licenses revoked, said Dung.
In addition, capable realty
developers will be required to restructure their property product development
plans in an effort to build more social housing projects for low-income people
and those entitled to social housing policies.
The government will also join forces
with the State Bank of Vietnam in extending credit loans to investors building
such social housing projects, and people who buy units from these projects.
Another solution proposed by the
Minister at the macro level is to ask the NA to allow value-added tax (VAT)
exemption for families and individuals planning to buy social housing for the
first time.
Realty investors developing
social housing projects will also enjoy preferential enterprise income taxes at
maximum rates and pay land use fees in accordance with the development stage of
their projects, according to Dung’s proposal.
Hanoi
and Ho Chi Minh City have also been asked to focus on expediting procedures to
remove difficulties for realty enterprises.
Regarding unsold building
material inventories, the minister said that as rising inventories in bricks
and cement and other building materials are caused by the decrease in total
social investment, tackling the realty market will help ease this issue.
Other solutions include the
development of new investment projects in the field of construction and the
removal of difficulties for the property market, like increasing the number of
social housing projects that use domestically-made building materials.
“Frozen” market
The local real estate market is
in a “frozen” state with very few transactions taking place. While local realty
investors find it hard to boost sales, many people who need a house find the
prices unaffordable.
As of August 31, total outstanding loans for the real estate sector stood at VND203 trillion, 66 percent of which account for bad debt, Dung said.
As of August 31, total outstanding loans for the real estate sector stood at VND203 trillion, 66 percent of which account for bad debt, Dung said.
However, if taking into account
all the real estate-related loans, such as real estate loans, or investment and
business loans backed-up up by real estate products as collateral, the total
outstanding credit is about VND1,000 trillion, or 57 percent of total
outstanding loans.
So, if the realty sector is in
trouble, its bad debts will rise, along with the hurdles of the real estate
market, affecting many other social and economic sectors, such as cement and
steel industries, and the safety of the banking system.
The cause of this situation is
that past development of the real estate market lacked clear and visionary
planning, leading to greater supply than demand.
Currently, there are 2,399
projects in 44 provinces and cities nationwide, and nearly 71,000 hectares of
land used for real estate.
Hanoi now has 368 real estate
projects taking up about 20,000 hectares, but there are only 233 ongoing
projects, accounting for about 40 percent, or 8,000 hectares.
Unsold inventories are now at
about 16,469 apartments, 4,116 low-rise buildings, and 25,870m2 of office
buildings.
In addition, the property product
structures are unreasonable, with a large number of real estate products
fitting in the high-end market, while there are only a few small-to-medium
sized projects at affordable prices for low-income people.
Capital for real estate projects
mainly comes from bank loans, so as the market became unexciting, bad debts in
real estate loans increased.
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