The Ho Chi Minh City Real Estate Association (HoREA) says visible “slowdown, stagnation and shrinking liquidity” are worrisome signs of uncertainty in the domestic real estate market.
Le Hoang Chau, HoREA chairman, shared the industry’s concerns at a forum chaired by Prime Minister Pham Minh Chinh last week.
Chau said the current imbalance between supply and demand was caused by a lack of new projects opening for sales, and one uncertainty factor in the market.
The second was the gap among housing segments, with the lack of affordable housing and social housing having negatively impacted social security for the majority who are vulnerable people with average or low income in urban areas.
In 2020, affordable housing priced at VND30 million ($1,280) a square meter in HCMC accounted for just 1% of total supply. And this type of housing has not existed since 2021, while high-end housing dominated with 74% of the market. The remaining segment was medium-level housing.
The third uncertainty factor was the dearth of housing products, which has driven housing prices up continuously over the past five years. Villas in HCMC are priced at VND500 billion ($21.32 million) a unit and high-end apartments at VND100 billion.
The fourth factor was the stagnation in real estate transactions, with customers and project developers finding it difficult to access credit.
Chau also said the existing legal framework should be completed to curb speculation and make the market a fair and efficient channel of land distribution.
The association said proposed amendments to the Land Law 2013 and related laws should be approved by 2023 and enterprises’ right to access land resources to develop projects must be secured.
"Companies must be recognised as the investor after they successfully obtain the rights to use land not earmarked as residential land, in line with state plans on land utility and urban or housing development."
The association also called for development of mechanisms that facilitate enterprises’ access to credit and other sources in the capital market, including issuance of corporate bonds.
There are concerns among developers and traders that banking credit to real estate has been narrowed down, while the corporate bond market tightened up following the cancellation of Tan Hoang Minh's nine bond issuances in early April due to its provision of "untrue information".
In response, PM Chinh said no "irrational" credit restrictions should be imposed. "The State Bank of Vietnam must guide domestic banks in lending to the real estate sector in line with laws and regulations, giving priority to commercial housing, housing for low-income earners, housing for workers, and projects to expand market supply," he told the forum.
The central bank (SBV) had earlier confirmed it only controls credit to some high risk areas like resort projects and speculative investments, while encouraging lending to housing for low-income earners and workers, as also upgrading old apartment buildings.
SBV Governor Nguyen Thi Hong said at the forum that despite its important role and connection to many production fields, lending for real estate trade and investment was risky and needed to be controlled.
Central bank data shows that total credit for the real estate sector in Jan-May this year reached VND2,330 trillion ($99.5 billion), up 12.31% year-on-year. The figure is higher than in the previous years, accounting for 20.66% of total credit in the economy, Hong said.
"Our view is that banking credit must focus on manufacturing and business, especially areas that the government encourages," she added.
Real estate companies in Vietnam issued VND820 billion ($35.4 million) in corporate bonds in April, a significant fall from the monthly average of $1.12 billion in 2021, indicating fewer dynamic activities in the primary bond market, according to top broker SSI Securities.
The Vietnam Bond Market Association reported that real estate companies had issued bonds again in May.