Prime Minister Le Minh Hung's statement that "The State does not subsidize housing but also does not completely let the market self-regulate" at a meeting with leaders of ministries, branches and Hanoi to implement the direction of General Secretary and President To Lam on rental housing in Hanoi on May 25, shows a new approach to the current housing problem.
Reality shows that if completely deferring to market regulation, capital flows will mainly flow into the high-profit housing segment, while the actual housing needs of the majority of people have been left behind.
The Vietnamese real estate market is facing a paradox that while the supply of high-end apartments, speculative land plots or high-priced commercial housing is constantly appearing, people with average incomes, young people, workers, civil servants or migrant workers are increasingly having difficulty accessing affordable housing.
Many people who have worked for many years still have to live in rented rooms in cramped, unstable conditions. Meanwhile, the dream of buying a house is increasingly distant as real estate prices increase too quickly compared to actual income.
Therefore, the fact that General Secretary and President To Lam previously directed and now, the Prime Minister emphasizes the role of rental housing is a remarkable change.
For a long time, the housing market in Vietnam has almost focused on the goal of home ownership. But in many developed countries, long-term rent is a popular and normal choice for the middle class.
When there is a stable rental housing system, reasonable prices, full infrastructure and professional management, people do not necessarily have to strain themselves to borrow tens of years to buy a house.
That is also the reason why Prime Minister Le Minh Hung believes that if rental housing is developed well, the demand for home ownership will decrease significantly.
Another noteworthy point in the development orientation of rental housing is that the State identifies the role of "creating", not replacing the market.
Meaning that the State does not directly subsidize all housing, but will create a mechanism for the market to develop healthier through planning, land, credit and appropriate financial policies.
Housing is not just a common commodity, but also related to social security, quality of life and urban stability. Therefore, if only letting the market self-regulate, businesses will hardly have the motivation to invest in low-profit segments with long return periods such as affordable rental housing.
Therefore, the Government's consideration of preferential credit mechanisms, stable interest rates, and appropriate loan terms or allowing businesses to buy back houses for rent is a positive sign.
In the context that house prices are increasingly far exceeding real income, the State's proactive creation to develop the rental housing market may be a necessary adjustment step to bring the real estate market closer to the actual housing needs of society.
