» » » Capital for Realty Market: Comprehensive & Drastic Management Measures Required

VNRE - In order to intensify realty market management and put real estate market back to the track, Nguyen Hong Quan, Minister of Construction has submitted to Prime Minister a document working out measures to stabilise the realty market.

In the opinion of Ministry of Construction, these measures will keep the market under control, resist speculation and price increase, stabilize the market, truly reflect market’s supply and demand capacity as well as avoid shocking and freezing the market which creates negative impacts on credit system and social life.

Forming housing savings fund

Despite the fact that for years, Ministry of Construction as well as functional authorities have issued many measures to direct the realty market’s development, in which the core is to stimulate supply of low-priced housing, since realty financial system hasn’t been completed, the market’s development still relies much on governmental currency and credit policies, there are still many difficulties in keeping realty’s price under control.

At the moment, capital for realty market’s development is mainly mobilized from bank system and from population. Stable capital in medium and long term have many difficulties whereas interest rate on loans for short term is very high, which greatly influences on realty products’ value. Especially, banks tightening credit on realty market has challenged investors in implementing projects, even stopped many works, causing waste and reducing supply for the market.

It is so obvious about the influence of credit policies on realty market’s development, however, for years, there are still confusions in working out solutions to this. According to statistics from Ministry of Construction, the current realty credit growth rate is over 20 percent per year but there has not been distinction between necessary realty and unnecessary one. As a result, it is easy for capital for market’s development to only flow in highly profitable segments such as luxurious housing, realty of tourism, resorts, which makes saturated market be subject to breakage. The solution given out by Ministry of Construction is release criteria set of realty lending for credit institutes in order to best allocate capital.

Another solution is to issue measures to limit, then stop using cash in realty transaction, especially in case of capital mobilization contracts, trading future formed housing and renting housing. This measure is considered the one to help minimize risks for partners as well as ease the pressure from cash. In addition, according to Ministry of Construction, the Government should soon study to form housing savings fund to assist labors in their buying houses, pilot the model of realty trust investment fund as implemented in some other countries, creating more supply, beside credit institutes, for realty market.

Tightening real estate management

The proportion of filled apartments in new residential areas that will be put into practice is also investigated to details by Ministry of Construction. Accordingly, in 18 residential areas in Hanoi, the proportion of storey condos put into usage comes up to approximately 100 percent, followed by segments of side by side apartments with 80 percent, while the segment of condo only reaches 58 percent. The main reasons supposed by Ministry of Construction are incomprehensive technical and social infrastructure of these projects, difficulties in transport and movement while speculation and property reserve are still popular. Functional authorities haven’t worked out measures to investigate, fine investors of delayed-progress projects. etc

In order to completely diminish “application-approval” mechanism, Ministry of Construction demands localities to seriously observe regulations on choosing investors of business housing in form of project tender as regulated in Decree 71. Intensify implementation of macro management measures, land clearance; build technical infrastructure and then tender on right of using cleared land. The Government will chair the tender to ensure publicity, transparency and land rent to be submitted to the national budget etc.

Reported by Luong Tuan | VCCI News

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