2023-09-03 00:38:00
Recently, the real estate market has developed positively. But he still needs more effective measures to help him recover quickly.
>> Foreign investors are increasingly involved in mergers and acquisitions
>> Reduction of the interest rate of loans to receive funds poured into real estate
>> NA Standing Committee considers text on real estate trade
The real estate market showed positive signs thanks to government support measures. Photo: VNA/CVN
The government has implemented various measures to revive the real estate market, which have had a positive impact on this market as well as on the real estate business community.
Prime Minister Pham Minh Chinh recently chaired an online conference to assess the implementation of government resolution No. 33 aimed at removing obstacles in the real estate sector, one of the pillars of the national economy.
The head of government asked the services concerned to quickly put in place measures to develop this market in a safe and sustainable way. He recommended to the Ministry of Construction to perfect the modifications of the laws on dwellings and on the real estate trade and to present them to the government, then to the National Assembly for a possible adoption during the 6th parliamentary session next October.
Making the most of policies
Pham Minh Chinh asked the State Bank of Vietnam (BEV) to adopt measures allowing businesses and home buyers to access credit. As for local authorities, they must strive to reform the administrative formalities relating to housing construction projects, he concluded.
Now is probably a good time to invest, as the real estate market has been showing positive signs lately. The drop in bank interest rates is one of the factors that will increase liquidity, particularly that of individual investors. According to Cân Van Luc, economist, member of the National Financial and Monetary Policy Advisory Council, when the interest rate of loans decreases, there are favorable consequences for the seller and the buyer. He said lower interest rates on loans benefit both sellers and buyers. He explained that the pressure from investment costs was easing as builders accessed loans at more reasonable interest rates, and so put in place more attractive sales policies, which would increase finance. to complete projects and start new ones. Real estate demand is also picking up as house prices fall, and so do interest rates, with prices becoming more affordable, purchasing power rebounding, the economist added.
The fall in interest rates is helping to solve the liquidity problems in the real estate market. Photo: VNA/CVN
Dr. Su Ngoc Khuong, senior director of Savills Vietnam’s Investment Advisory Department, said the BEV has lowered its key rates four times in recent years. This lowers the cost of capital for borrowers and lending institutions, thereby boosting cash flow and economic growth. According to him, circulars 02 and 03, issued by the Central Bank at the end of last April, authorized a restructuring which made it possible to maintain the debt unchanged for the companies in difficulty, including the purchase of corporate bonds by the companies of credit. These texts have allowed real estate investors to reorganize their finances, generate cash flow and alleviate financial problems.
Vietnam Realtors Association (VARS) President Nguyên Van Dinh said lower interest rates are a good sign for the real estate market, helping to solve liquidity problems. It is expected that the demand for housing over the period 2021-2030 would continue to increase, especially in urban areas. According to experts, the newly launched policies will give impetus to the development of the real estate market.
According to the Ministry of Construction, the urban population rate is currently regarding 40% and will increase to regarding 45% by 2030. With the population growth rate and housing demand, regarding 70 million square meters more urban dwellings must be added each year.
However, VARS estimates that the social housing and low-cost housing (HLM) segment will grow. Indeed, the supply of affordable apartments represents less than 2% of the total supply of new apartments in Ho Chi Minh City and Hanoi. Some investors like Vinhomes plan to deploy 500,000 homes over the next five years. Him Lam and Hung Thinh also plan to develop this market in the near future. The government passed Resolution No. 33 dated March 11, 2023 on a number of measures to remove hardship and promote safe, healthy and sustainable real estate development. It also published Decree No. 08 dated March 5, 2023 amending and supplementing a number of articles of the decrees concerning corporate bonds. Analysts believe that the published documents have opened a new legal avenue that will allow struggling companies to access funds to restructure and restore their situations. In addition, the government has pledged to build over one million social housing units for workers by 2030, which will create a growth engine for businesses.
Access to capital must be more open
The BEV has just published circular 06 which takes effect from September 1, 2023. It stipulates that credit institutions are not authorized to grant loans to pay contributions for the realization of projects which are not eligible as prescribed. the law.
Residential buildings offered for sale in the district of Câu Giây, Hanoi. Photo: VNA/CVN
Circular 06 aims to control the proper use of capital and reduce the risk of assignment of guarantees. The contribution of capital to buy shares or return it to projects that do not meet legal requirements is difficult to control; there is no basis for regularly assessing the financial situation, operation, debt repayment capacity of the party receiving the capital.
There are still some loopholes such as regulations that the project is eligible for sale to obtain a loan, while companies must first complete the infrastructure. When the project is eligible for sale and the infrastructure is complete, loan capital is no longer so essential for real estate businesses, as they can put up for sale and raise capital from buyers. Thus, in addition to restricting the operation of real estate companies with legal land regulations, the management agency has also reduced bank loans, leading companies already in a difficult situation to be even more so in the coming times. In this context, although interest rates are regarding to fall, the publication of Circular 06 will lead to difficulties in access to credit for real estate companies, perhaps even overshadowing the impact of the fall in interest rate.
Lê Hoàng Châu, chairman of the Ho Chi Minh City Real Estate Association (HoREA), said the key question first was how to increase overall demand for the real estate market. In the current context, this market is still in a very difficult situation due to very low purchasing power, because companies are short of cash. Therefore, having access to credit is a “lifeline” for real estate businesses.
The Linh/CVN
1693705353
#efforts #overcome #difficulties
