The government, regulators, and businesses must join hands to solve woes in the ailing real estate market, not helping any single enterprise, Prime Minister Pham Minh Chinh concluded at a conference held Friday.
Chairing the event, Chinh said realty firms must be responsible for themselves, solve their problems due to their own mistakes like false market predictions and inefficient investments, and restructure their portfolios with more affordable products, towards suitable profits.
“Doing business has ups and downs, permanent profits are impossible, and stakeholders and parties must join hands during tough times,” the PM said.
He added authorities would solve problems in legal procedures and house planning. Meanwhile, banks must reduce interest rates and fees to support the market.
The PM lauded relevant authorities for drafting a credit package for affordable housing. Previously, the Ministry of Construction had suggested a credit package of VND110 trillion (over $4.6 billion) to support the affordable housing sector.
The ailing property sector is facing many problems, Deputy Minister of Construction Nguyen Van Sinh told the conference.
Last year, the supply of mid-end to high-end houses featured 126 approved projects with 55,732 apartments, 466 under-construction projects with 228,029 apartments, and 91 completed projects with 18,206 apartments, heavily outweighing affordable housing in 2022, he said. Meanwhile, social housing and workers’ houses saw only 157 projects in total with 24,056 apartments.
Sinh added that property prices strongly rose in Q1 and Q2 last year, halted in Q3, and were corrected in some projects in Q4. He attributed problems to realty firms having limited access to credit, high interest rates, rising prices of construction materials, and others. Those issues forced firms to lay off employees and suspend projects, consequently hurting contractors, material suppliers, and other sectors.
According to the Ministry of Construction, the number of real estate companies filing for bankruptcy last year increased by 40% year-on-year.
Ho Chi Minh City Real Estate Association chairman Le Hoang Chau said the two biggest challenges in the sector are legal problems and the lack of credit access. He estimated administrative procedural issues account for 70% of the woes property developers face.