The apartment segment in Vietnam may find itself in a bubble this year if other housing segments are not put on the market soon, said economist Le Xuan Nghia.
“A bubble appears when supply and demand do not match up. When prices increase, people are reluctant to sell because they want to hold out for more money, which means demand increases," said Nghia, a member of the National Financial and Monetary Policy Advisory Council, at a seminar on Friday.
He warned that if other housing segments are not brought onto the market, sooner or later, the apartment segment will collapse. This could cause people to lose trust in the government's housing policies and strategies.
Nghia further noted that the government's view is to have a system of social and low-cost housing with interiors depending on income and exteriors meeting all the criteria set for an apartment area.
He stressed the need to reform the policy on social housing and low-cost housing, and use the state budget to support the development of this segment.
According to statistics, 26 provinces and cities have applied for special mechanisms on the same basis of the Land Law, and in the near future this number will increase, Nghia noted.
Assessing investment opportunities for the real estate market, the expert said the current crisis is a "segment crisis", so “we need to focus on promoting social housing and affordable housing to solve the problem”.
There are already policies in place to support social housing development, such as the VND120 trillion ($4.8 billion) credit package and interest rate support for loans to build and buy social housing. However, they have produced humble results, with the VND120 trillion package disbursing only VND7 billion ($280,000).
"The social and low-cost housing segments have almost failed, leaving the apartment segment alone to advance. It is a step backward in housing policy, and we cannot afford a crisis in this segment," Nghia said.
"We have followed the wrong path. Instead of focusing on solving problems in each locality, we have been clearing barriers for a few corporations and projects," he added.
Hoang Anh Minh, editor-in-chief of the seminar organizer VietnamFinance, said that at the end of 2023 and in early 2024, the National Assembly passed the revised Land Law, Housing Law, and Law on Real Estate Business. With important adjustments, these three laws have established the foundation for a new stage of development for the Vietnamese real estate market.
They are expected to clear legal obstacles and create conditions for projects to be launched and re-launched, helping businesses to carry out mergers and acquisitions, improve their financial situation, and overcome challenges to lead a market revival after a crisis that has lasted nearly two years, he said.
Nguyen Van Dinh, a real estate legal expert, said he expected the new Land Law will unleash land resources and remove obstacles for projects.
"The Land Law can be implemented from July 1, but some provisions will come into force later. In the immediate future, the most important thing in executing the law is to clear barriers for thousands of projects. To do this, sub-law documents need to be carefully made with opinions from the public taken into account," he said.
Since the end of 2023, the property market has recorded a positive recovery in some areas and segments. In the first months of 2024, localized property fever emerged, leading some people to believe that a new cycle of the real estate market has begun.
Recently, the Prime Minister asked the National Assembly to allow the Land Law to take effect ahead of schedule on July 1, 2024, instead of January 1, 2025. Along with this proposal, government agencies are urgently completing draft decrees guiding the implementation of the law.