The plan will help the market strike a balance between supply and demand and grow sustainably, Prime Minister Pham Minh Chinh said.

PM Chinh made the point at a national online conference in Ha Noi on Friday which aimed to seek ways to remove obstacles in the domestic real estate market and promote its development in a safe, healthy and sustainable way.

Chinh said that the domestic real estate market was facing a number of problems.

The market saw a serious imbalance between supply and demand with an oversupply in the high-end segment but a shortage of homes for low-income earners. Prices were also at unreasonable levels compared to per capita income.

Legal bottlenecks were also hindering the development of real estate projects, which affected supply, coupled with difficulties in accessing capital, including sources from credit, corporate bonds and others.

“The problems of the real estate market must be resolved with the spirit of harmonising benefits and sharing risks between the State, residents and enterprises,” Chinh said.

“It is critical for the realty market to find a balance for supply and demand which will be reflected in the prices. Prices must be the impetus to promote development, not to undermine development,” Chinh stressed.

From that point, Chinh said that the Government would have a separate housing development project with a focus on homes for low-income earners and workers as a bold move to enable the market to find a balance.

At the conference, the Ministry of Construction also proposed the Government arrange a credit package worth around VND110 trillion (US$4.6 billion) in the form of refinancing for commercial banks to finance social housing projects and housing projects for workers.

Similar to the VND30 trillion package which had been implemented in 2013-16, the credit package was expected to tackle the supply crunch of housing for low-income earners.

Admitting that the real estate market was in a lot of difficulties, Deputy Minister of Construction Nguyen Van Sinh pointed out problems related to legal bottlenecks, determining market prices, housing development for low-income earners, accessing banking credit and the pressure from corporate bonds on real estate companies.

Sinh said that the focus must be placed on improving institutions, including submitting to the National Assembly for approval the amended laws on land, housing, real estate business and bidding and to the Government decrees guiding procedures on investment, land, urban planning, construction, tax and securities.

An important solution was to unlock capital for the real estate market, Sinh said. Regarding banking credit, he said that policies must be improved to raise both domestic and foreign financial resources for housing development, control credit growth at a reasonable rate and create conditions for developers and homebuyers to access credit.

Removing roadblocks for the corporate bond market was also an important measure to unlock capital sources, he said. Many real estate enterprises had issued a large number of bonds that would mature this year.

Economic expert Can Van Luc said that the real estate market was seeing “unusual development” because the macro economy was good, but the property market was almost frozen after more than two years of a price fever which increased by around 20-50 per cent compared to about 10-20 per cent globally.

The biggest problem at the moment was that the legal environment has bottlenecks, Luc said. He pointed out that many regulations were overlapping, inconsistent, unclear, lacking guidance and no longer suitable. In addition, some officials lacked accountability. All these problems push many projects into stagnation, making them impossible to implement, sell, transfer, mortgage, or rent, leading to abandonment, rising inventory, waste and loss of confidence.

Other problems included problems in planning, land clearance and unreasonable housing prices.

Luc pointed out that on average, it took at least 23.5 years of income for a Vietnamese to buy a house, ranking 14 out of 107 countries, equivalent to Thailand and the Republic of Kora and much higher than Indonesia (18.5 years), Singapore (15.5 years), India (9.2 years) and Malaysia (8.1 years). Limited supply caused housing prices to skyrocket, he said.

“Viet Nam would not need to use the money from the State budget to rescue the real estate market. Viet Nam will need to build mechanisms and policies to promote its development. The focus should be on developing homes for low-income earners,” Luc said.

The Government should consider a master plan to develop homes for low-income earners like Singapore and the Republic of Korea with lessons learned from the implementation of the VND30 trillion package in 2013-16.

It was also important to improve market transparency together with the development of a market database, he stressed. Real estate developers must improve transparency in capital raising and use, besides enhancing restructuring and improving capital efficiency.

According to Hoang Van Cuong, a National Assembly Deputy, the difficulty of the real estate market was now completely different from that in the 2010-22 period when there was a supply excess which caused drops in prices.

Now, the market was stagnant but prices remained at high levels due to a shortage of supply. Cuong said that the problems related to supply must be tackled to promote liquidity, and said that the focus should be on handling problems related to credit, corporate bonds and legal roadblocks.

Le Xuan Nghia, member of the National Financial and Monetary Advisory Council, proposed that a tax should be raised to prevent speculation.

Governor of the State Bank of Viet Nam Nguyen Thi Hong said that to ensure the real estate markets develops safely, healthily, and sustainably, the market should serve the majority of people, meaning that the supply should meet the demand of those who were in need of homes, and speculation must be limited.

Regarding the Ministry of Construction’s proposal of a credit package for homes for low-income earners, Hong said that it was necessary to have a separate package for this segment to enable the market to find a balance point. However, more consideration must be given to ensure this package was feasible, she said.

Minister of Finance Ho Duc Phoc said that the Ministry of Finance would implement measures to stabilise and develop the corporate bond market transparently, safely and sustainably to unlock the medium and long-term capital for investment and development. — VNS