Vietnam real estate market 'suffers from three diseases like old people'

The current real estate market is likened to the body of an old person suffering from three diseases, which can only be cured with the right prescription and treatment in the right direction.

The forum “ Special mechanisms and capital flows for the real estate market,” organized by Hanoi Radio on April 9, attracted public attention. In particular, facing the major problems that the market is facing, experts have taken the pulse of the market and commented that the current real estate market is like the body of an old person suffering from three diseases.

The speakers at the forum "Specific mechanism and capital flow for the real estate market" organized by Hanoi Radio on the morning of April 9 in Ho Chi Minh City, Photo: Hanoiionline.vn

The real estate market is suffering from 3 diseases of the elderly

According to Prof. Dr. Tran Ngoc Tho - Ho Chi Minh City University of Economics, the real estate market is like a patient suffering from three diseases of the elderly: high blood pressure, high blood sugar, and high cholesterol. If the real estate market is like a living body, then when these three diseases become severe, it will easily lead to a stroke.

"The first disease is high blood pressure, which is reflected in the fact that housing prices are too high. Workers find it difficult to own a house. If we do not handle this situation, it will cause many dangers to the market in the future," shared Professor Tran Ngoc Tho.

According to statistics, in the first quarter of this year, the price of primary apartments in Hanoi reached 75 million VND/m2, an increase of 34% over the same period. The price of low-rise houses reached 226 million VND/m2, an increase of 3% quarterly and 17% annually. These are telling numbers, reflecting an alarming situation, because the price is increasing but the actual transactions are very few, almost stagnant. These are signs of the risk of freezing the market, a real estate bubble.

According to Professor Tran Ngoc Tho: "The second disease is related to the specific mechanism and capital flow, which is high blood sugar, shown by the fact that the real estate industry depends too much on capital flow causing 'addiction to sugar' which is credit flow and disguised through bond issuance channels related to the banking system. When blood sugar is blocked, liquidity immediately drops, the market loses confidence".

It is known that this year, there will be about 100,000 billion real estate bonds that need to mature, of which 1/3 are bonds that have been restructured since 2023. In addition, currently, more than 50% of the capital of real estate enterprises comes from bank credit, while banks use short-term capital for long-term loans, causing great risks to the financial system. Therefore, to overcome the situation of over-reliance on credit, it is necessary to open up many other capital channels such as bonds, treasury bills, investment funds, and development funds.

"The third disease is cholesterol. High cholesterol is shown by the fact that real estate inventories are too high. These are bad debts that have silently accumulated in the banking system. If we do not handle these bad debts, it will lead to a financial stroke," Professor Tran Ngoc Tho analyzed.

The real estate market needs prescriptions and treatment regimens.

According to statistics from 103 listed enterprises that have published their Q4/2024 Financial Reports in the real estate group, including housing and industrial parks, the total value of inventories by the end of 2024 is more than 491 trillion VND. This is a record-high inventory level in more than 2 decades.

It can be seen that the indicators of the "health" of the real estate market are currently at an alarming level. Therefore, it is necessary to have the right prescription and a good treatment regimen.

At the Forum “Special mechanisms and capital flows for the real estate market”, policy makers and experts all agreed that Resolution 170 and Resolution 171 are special mechanisms and medicine to help improve the health of the real estate market.

According to Prof. Dr. Hoang Van Cuong, member of the National Assembly's Finance and Budget Committee, "The special mechanism that the National Assembly passed through Resolutions 170 and 171 addresses two groups. Group 1 is the group of projects that were previously implemented but violated and were handled. The investor had to stop the project, and now a mechanism is being put in place for the project to continue. Group 2 consists of projects that were previously required to have residential land but now do not have residential land and can still be converted to commercial housing. However, this is a pilot project that requires local approval."

In Ho Chi Minh City alone, there are currently 86 projects with a scale of about 57,000 houses that have been stuck since 2015 and cannot be implemented because the land on the project does not have any square meters of residential land. However, with Resolution 171, the projects will be resolved. So far, with the guidance of Decree 75, Ho Chi Minh City has received registration for 343 pilot projects with more than 1,900 hectares.

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, said: “Each project has 830 houses, so 343 projects will have a large amount of houses on the market. It is expected that there will be an additional 216,000 houses on the market in the next 3-10 years. When we invest about 1,000 billion VND for each hectare of commercial housing project, there will be 1 million 910 billion VND invested in society and pull in 35 economic sectors, creating jobs for millions of workers”.

It can be seen that the specific mechanism is the “springboard”, while capital flow is the “driving force” to help the real estate market develop sustainably. However, experts say that the key factor is still the synchronous coordination between the state, localities, banks, and enterprises.

(hanoionline.vn)

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