About 30-40 percent of real estate projects should be closed to ensure a balance between supply and demand, according to the Ministry of Construction.

The ministry said that cutting real estate projects will reduce inventories and prevent land from being wasted after unfinished projects have left the land fallow.

Deputy Minister Nguyen Tran Nam said that many developers do not have resources to complete their projects.

"Even if they do have the finance to implement the projects, the demand simply isn't there," he added.

In Hanoi alone, there are 720 licensed projects covering a total area of more than 300,000 hectares. It's estimated that these could satisfy demand until 2050.

The figures are alarming given the declining market and difficulties people are facing in accessing credit, the ministry said, adding that without proper management, a scenario of a city full of unfinished projects can happen.

Nam said that allowing localities to decide which projects to cancel would cause problems because during the real estate boom, many of them had teamed up with enterprises on development projects, causing a conflict of interests.

Most localities proposed to revoke licences from just a few percent of projects, rather than the 30-40 percent that is needed to find a balance.

The ministry plans to set up a group in charge of checking, stopping and revoking real estate licences nationwide.

An expert said that the issue isn’t pressing because in the medium term, the market will not be flooded as investors are encountering cash flow difficulties.

He recommended simplifying procedures while allowing the construction of affordable housing for low income earners in order to reduce inventories.-VNA