VietNamNet Bridge – The Ministry of Construction has written to the Prime Minister proposing a suspension of the licensing of fresh commercial housing and urban area development projects this year in what is seen as a desperate effort to rescue the still-dreary real estate market.

The ministry said the Government should tell city and provincial authorities to temporarily stop licensing new commercial housing and urban town projects to focus resources on propping up the market in line with Government Resolution 01/NQ-CP dated January 2, 2014.

By the end of last year, the country had had more than 4,000 urban development projects occupying over 102,000 hectares of land and costing an estimated VND4,500 trillion (US$211 billion). Their unsold housing and land were worth VND94.5 trillion (US$4.4 billion).

As of February this year, the total value of the unsold properties had been down to nearly VND92.7 trillion.

Construction Minister Trinh Dinh Dung told the Daily last week that real estate developments in Vietnam have gone unchecked over the years, causing an oversupply of luxury homes but a lack of affordable homes for low-income people.

The Government’s Directive 2196 issued in 2011 to roll out solutions to strengthen property market management and Decree 11 issued last year on management of urban area development investments are used as a legal basis for the licensing suspension proposal, Dung said.

A lot of licensed housing projects are not occupied, so “we should not issue new licenses to prevent such a waste from rising,” he noted.

However, the ministry said the real estate market early this year began showing signs of recovery which is evident in a slight pickup of transactions.

Marc Townsend, CEO of CBRE Vietnam, a real estate consulting and management services firm, said there remain real estate bubbles.

A research project recently publicized by Japanese professor Kenichi Ohno indicates housing prices in Hanoi’s old quarter are many times higher than in Tokyo’s central business districts like Hongo, Shirokanedai and Iidabashi.

Surprisingly, Hanoi land prices were higher than in Tokyo though Vietnamese people’s incomes were 31 times lower than those of the Japanese in 2012, said the professor.

A report by the Economic Committee of the National Assembly in 2012 said the average housing prices in Vietnam were 25 times higher than the average income of Vietnamese while the rate is other countries was 2 to 4 times. trillion (US$332.2 million) and US$200 million, Nhan Dan reports. These results were announced at an investment promotion conference held by the province and Bank for Investment and Development of Vietnam (BIDV).

Source: SGT