The Minister of Construction said the real estate market is a frozen zone, with very few transactions. Real estate businesses are in trouble while a large proportion of poor people still lack housing.
According to the State Bank of Vietnam (SBV), by August 31, the total outstanding loans related to real estate was about VND203 trillion ($10.15 billion), of which the non-performing loan (NPL) ratio was 6.6 percent.
However, Minister Dung said if the outstanding loans related to real estate, which includes loans related to real estate business, loans for production and business investment, mortgages by real estate, the credit balance is about 57% of total loans, or about $50 billion.
"So if production and business are in difficulty, bad debts of businesses increase, along with the difficulties of the real estate market, the impact on many industries such as construction, building materials, electrical equipment, steel industry, etc. will be huge. It will also affect the safety of the banking system and the macro economy," he warned.
As a result, the people will be affected, as a whole. Drastic measures should be taken to remove difficulties for this market, the Minister added.
Dung said, to remove difficulties for the real estate market, it must fix the cause of the real estate problems.
First, in recent times, the real estate market has developed spontaneously and in an unplanned way, thereby resulting in oversupply. Most of real estate products are high-class and medium-class, not cheap products for low-income earners and social housing.
On the other hand, the capital for real estate projects mainly relies on bank loans and capital contributions of people who buy houses. So when the products are unsold, the market freezes, bad debts rise. The government is focusing on improving the legal documents related to management of construction, especially related to urban development and real estate business.
Thirdly, along with the State Bank of Vietnam, banks have to extend credit loans to investors, and home buyers, especially social housing buyers.
He also proposed the National Assembly to allow VAT exemption or reduction for households that buy social housing and commercial housing for the first time and to allow investors in social housing to enjoy the highest preference of enterprise income tax.
Minister Trinh Dinh Dung also proposed a number of measures to deal with inventory building materials.
"Solving difficulties for the real estate market by directing real estate businesses to build housing for the poor, low-income people will achieve a variety of purposes," Dung said.
There were 2,399 projects (statistics from 44 provinces) and approximately 71,000 hectares of land is devoted to real estate. Hanoi alone has 368 projects with 20,000 ha.
National inventory: 16,469 apartments, 4,116 low-rise buildings, 25,870 m2 of office space for lease.