Ministry eyes promoting stable realty market

Hanoi (VNA) - The construction ministry is drafting a project on management of the property market through six measures to support transparency and stability, Minister of Construction Pham Hong Ha said.

The minister said at a meeting with property developers -- held by the Vietnam Real Estate Association last week -- that the property market in the first seven months of this year was stable and that no unusual developments were seen.

However, there were potential risks to which special attention must be given.

Ha said the imbalanced developments in supply and demand of luxury projects and housing projects for low-income earners are a problem, adding that oversupply of the former and shortage of the latter is forecast for next year.

The country needs 10 million square metres of social housing, but currently has only 30 percent of that. In addition, there is a severe shortage of housing projects for lease.

Promoting social housing developments will be the focus, and policies will be prepared to encourage property developers to invest in this segment, the minister said.

The concentration of the credit flow in high-end projects or a minority of developers is another risk, although outstanding loans in the property sector remained at a safe eight percent of the total outstanding loans, he said. He added property developers should tighten management of their own projects to ensure liquidity and be prepared for credit tightening policies.

He also noted that while there was some speculation in some projects, it had not become a widespread phenomenon.

The ministry will closely watch the market developments to ensure sustainable growth and efficient and cost-effective use of resources, Ha said, stressing the importance of the real estate market in macro-economic stability.

According to the minister, financial resources for property development played a key role. “It’s time Vietnam eyes new capital sources such as from real estate investment trusts,” he said. Capital for property development in Vietnam now mainly comes from developers, banks and citizens.

In the draft, the ministry is seeking to prepare policies to accelerate the capital market for property development. Improving the transparency of the property market is also an important measure.

President of the Vietnam Real Estate Association Nguyen Tran Nam said detailed instructions for transactions in unfinished property projects are needed, together with tighter management to ensure compliance.

According to Nam, the construction ministry should work with relevant ministries and agencies to publicise areas where foreigners will not be allowed to buy houses or apartments.

He said the association will work with construction authorities in building a market database that is necessary to boost the development of the real estate market.-VNA