Prime Minister urges actions to assist Vietnam real estate market 

The prime minister called for joint efforts from the authorities and companies to aid Vietnam real estate market to prevail over current woes and stay on a healthy development path. The State agencies and provincial administrations are urged to expedite the resolution of market concerns and real estate developers to restructure their operations and capital inflows, which are seen as measures to aid the property market.

Prime Minister urges actions to assist Vietnam real estate market

Such is the request of Prime Minister Pham Minh Chinh in a directive issued on December 14, in which he emphasizes the need to take drastic measures to facilitate the development of the real estate market. According to the directive, the Ministry of Construction has responsibilities for amendment of overlapping regulations hindering the execution of real estate projects and accelerating the contractor selection to conduct social housing projects in central cities and industrial parks.

The directive stated: "The purpose is to have at least one million social housing units in the following ten years." In response to the shortage of access to credit loans, commercial banks must streamline their procedures to deliver capital to qualified real estate and social housing projects on time. The prime minister also urges the Ministry of Finance to supervise the corporate bond market situation and help real estate firms that are struggling financially. In mid-November, Prime Minister Chinh set up a task force specializing in addressing bottlenecks in the property market. A recent report from the Ministry of Construction showed real estate sector remains a vital component of the economy, contributing 11% of the GDP.

However, the market has seen a significant drop in transactions in recent months, and many projects have not been able to proceed due to the lack of capital. The explanation for this problem has attributed the issue to the government's restriction of bank credit in the market and strict regulations on issuing corporate bonds. The Ho Chi Minh City Real Estate Association (HoREA) noted many property firms' downscale procedures and cut costs. Meanwhile, those struggling with working capital are forced to borrow from other sources at high-interest rates.

Property investors should save themselves from the stalled market - Vietnam real estate market

Property investors should cut their losses now and save themselves instead of waiting for the State to rescue the stalled property market. Market liquidity stays low despite discounts and loan incentives offered by developers to boost sales, said Vo, also former Deputy Minister of Natural Resources and Environment. Several investors face a financial crunch selling properties at 15-20% discounts. 

Cushman & Wakefield said sales dropped by half starting July, and the Vietnam Association of Realtors said property sales have been plunging this year. Online listing platform Batdongsan saw searches for properties in HCMC, Hanoi, Danang, and Can Tho decline by 14-19% year-on-year. If the property market resumes to slow down, "numerous real estate companies may go bankrupt," Vo said. The former deputy minister said that the State should tackle the challenge appropriately and not rashly adopt intervention measures now. Property prices should further reduce in the following years so that most people will benefit from that. He said that property investors should cut their losses now and save themselves instead of waiting for the State to rescue the stalled property market. However, he noted that if the stalled property market causes a too high ratio of bad debt, "the State should consider taking measures to deter the bad debt from destabilizing the macro-economy,", particularly the financial market.

Tran Khanh Quang, CEO of property developer Viet An Hoa, said the selloff this year is only the beginning. More financial challenges can turn out in the coming years, significantly for those who use loans to make investments. "Further drops in prices are forecasted next year with prices half of what they are now."