One of the major bottlenecks of the domestic real estate market in 2019 is the tightening of project licensing by authorities, making a sharp decline of new housing supply. This challenge is clearly seen in the country’s major markets. In Ho Chi Minh City, only 2 projects have been granted new investment policies and 30 projects have had construction permits in 2019. Meanwhile, Hanoi market had only over 25 projects.
The challenge still lasts until 2020. According to the Vietnam Real Estate Association, in the first three quarters of 2020, only over 20,000 new products are offered for the first time on the market. Compared to 2019, this figure only reached over 35%, and compared to 2018, the source of goods only reached 20%.
Mr. Nguyen Manh Ha, Vice Chairman of the Vietnam Real Estate Association said, the slow approval of projects in recent years is due to the legal overlap in the laws. The reason that authorities are prudent when approving is to ensure the transparency and healthyness of the market.
However, there have been positive signs of removing this knot. Even in the fourth quarter of 2020, the Government made a move against the above situation. Specifically, Resolution 164 resolves investment problems in urban areas; The revised Investment Law, effective on January 1, 2021, will largely remove legal problems for the real estate market. Resolution 164 is expected to blow a new wind to the market with new development opportunities.
Mr. Bui Van Doanh, Director of the Vietnam Real Estate Research Institute, also said that in 2021, when entering a new term, many projects to amend the law are expected to be completed. This means that problems on legal policies in some segments and types will be removed in a more specific and detailed direction. Therefore, the congestion points are cleared, leading to the prosperity of business activities, project development.
In addition, many new policies to support the market, new legal documents that have been directed and researched by the Government will contribute to solving outstanding problems of the market for so long.
Mr. Doanh said in 2021, the thrust of the market is expected to come from capital flows through different channels. Recently, commercial banks are facing difficulties because they do not have borrowers, so deposit and lending rates have continuously decreased. When interest rates drop sharply, banks will inevitably choose a lending channel for real estate, because this is still an investment channel to ensure quite certain profits.
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