Real estate prices beyond people's budget
On October 28, under the chairmanship of Politburo member and National Assembly Chairman Tran Thanh Man, the National Assembly listened to a report from the Supervisory Delegation on the implementation of policies and laws on real estate market management and social housing development from 2015 to the end of 2023.
According to Chairman of the Economic Committee of the National Assembly Vu Hong Thanh, during this period, the scale of added value of the real estate business increased gradually each year, from VND 83,247 billion to VND 121,090 billion, with an average growth of 2.72% per year.
According to the National Assembly's monitoring delegation, the slow land valuation still occurs in many localities, which is the main obstacle leading to the stagnation of many real estate projects. This includes projects that need land valuation to fulfill financial obligations before being put into operation and projects that must review and re-determine land prices for collection.
Not only that, new real estate projects also have difficulty accessing credit capital, and interest rates are still high. The main form of capital mobilization for real estate enterprises in the corporate bond market is to issue individual bonds. Meanwhile, the issuance of corporate bonds to the public is still limited.
Many businesses with weak financial capacity still increase the issuance of corporate bonds. Many real estate businesses issue large-scale bonds without collateral or with stock collateral, posing potential risks in ensuring payment of bonds when due.
The monitoring results also show that real estate prices are still high compared to the income of the majority of people. Meanwhile, many abandoned urban areas and mini apartments still have many shortcomings and have not had effective solutions; old collective housing areas do not ensure living conditions for people. In particular, in recent times, many projects have encountered problems and have been slow to be implemented. In Hanoi, there are 712 projects and in Ho Chi Minh City, there are 220 projects with problems.
Real estate bubble of vested interests
Speaking at the discussion, delegate Ta Van Ha (Quang Nam delegation) pointed out the reality of the real estate market with high and sudden price increases, besides institutional and policy problems, there are signs of manipulation and price inflation, creating a real estate bubble by a group of interests.
The Quang Nam delegation said: “It is necessary to closely and accurately assess the problem, from which to point out specific and fundamental solutions. The draft Resolution has assessed the limitations, but mainly the limitations in policies and laws, but there are still unusual factors, sudden price increases, 2-3 times higher, not suitable to the general reality and the needs of the people”.
According to the delegate, one of the solutions to reduce real estate market prices is real estate bonds. However, currently, real estate bonds are issued at an interest rate of 12-15%, plus about 3% issuance fee. Thus, the outstanding debt of real estate bonds at maturity is under great pressure. If there is no strict control to restore and develop the real estate market, the issuance of bonds will not be effective. In about 3 years, having to pay such high interest rates will easily create a burden for the State and the people. It even poses a risk of increasing bad debt and even bankruptcy.
“Therefore, the real estate market cannot cool down in the coming time and people will not have the opportunity to access the market. Therefore, it is necessary to study solutions and conduct inspections, checks, and review the foundations to restore and develop the real estate market in a healthy and right direction,” delegate Ta Van Ha suggested.
Appreciating the report of the Supervisory Delegation on the implementation of policies and laws on real estate market management and social housing development from 2015 to the end of 2023, delegate Hoang Van Cuong (Hanoi Delegation) also said that it is necessary to build a mechanism to manage professional real estate trading floors.
According to delegate Hoang Van Cuong, the abnormally high real estate prices are due to the increase in people buying real estate for savings, causing the cash flow into real estate to increase, not flowing into production and business; the real estate supply is increasingly scarce; market forces such as brokers and auctioneers deliberately push prices up to make a profit.
"The outstanding thing is that real estate prices in big cities are very high and continuously increasing, exceeding the payment level of the majority of people in need of housing," the delegate commented.
