Construction Ministry to cool down real estate market, prioritize affordable housing
Minister of Construction Nguyen Thanh Nghi said the ministry will change the policies related to the development of affordable housing by adopting a new mindset.
Speaking recently at a conference on the ministry’s work in the first quarter and discussing tasks in the second quarter, he said one of the key tasks is management of housing projects and the real estate market.
The ministry will build a national housing development strategy with special attention to solve problems related to affordable housing.
Also, it will complete the compilation of a draft decree amending a decree on the renovation and reconstruction of apartment blocs, and submit the draft to the Government.
Earlier, in a report to the National Assembly, the Ministry of Construction (MOC) said that real estate prices, especially housing, do not truly reflect the real value of property and are unaffordable for most people.
In theory, housing prices would be considered reasonable if profits from renting approximated bank deposit interest rates.
The Housing and Real Estate Market Management Department under MOC admitted that after 10 years of implementing the national housing development strategy to 2020, only 5.2 million square meters have been built, just 41.7 percent of the plan.
According to MOC, real estate developers are mostly focusing on developing housing for high-income earners. As a result, the market is witnessing a high-end housing oversupply, while available social housing projects and affordable housing (priced at less than VND25 million per square meter) for medium- and low-income earners are in short supply.
The ministry estimates that the demand for high-end products (priced at VND25 million per square meter or higher) just accounts for 20-30 percent, while demand for affordable products accounts for 70-80 percent of the total housing market.
The prices of urban houses are much higher than people’s average income, while apartments priced at VND1-2 billion are no longer available on the market.
There are a few housing projects in Hanoi with selling prices of less than VND20 million per square meter. But In HCM City, there is no apartment project with a price below VND25 million per square meter. Therefore, affordable homes are still a dream for many Vietnamese workers
Regarding capital for social housing development, MOC said it would propose providing VND1 trillion worth of capital more for the Bank for Social Policies in accordance with Resolution 71/2018/QH14, and VND2 trillion for credit institutions which would be disbursed for social housing projects.
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