Removing legal problems – a solution to help reduce house prices

The Ho Chi Minh City Real Estate Association (HoREA) has just released a report supplementing the recommendations of real estate businesses on the prolonged legal entanglement leading to the deadlock in housing supply, the main cause of house prices in the world. the city area escalated. According to HoREA, in order to reduce house prices, it is necessary to urgently remove legal obstacles to clear the supply of all segments as soon as possible.

Le Hoang Chau, Chairman of HoREA, said that in the group of projects queuing up to remove legal obstacles, it is estimated that by the second quarter of 2022, there are tens of thousands of apartments belonging to large-scale projects that have been delayed for many years. This supply of suspended housing includes both commercial housing (unlimited offering) and social housing (only offered for sale to low-income people according to the State’s regulations). residential (serving for people with ground clearance). This is a potential supply for the housing market but has been interrupted for a long time, even with many projects frozen for 5-10 years, leading to rising costs, plus the scarcity of goods. push the price of houses formed in the future to escalate.

Therefore, according to Mr. Chau, to pull down housing prices, the first thing to do is to increase supply. In the last 2 years, the supply of housing in the whole market in Ho Chi Minh City has continuously decreased sharply. The peak is in 2022, when the epidemic breaks out, the supply of new housing will decrease by more than 50%, leading to a shortage of goods, which is an alarming situation. In addition, the housing market is also skewed towards the high-end segment accounting for 74% of the product basket while the affordable housing category (affordable segment) accounts for only 1% in 2020 and disappears in 2021 (0%). .

Due to the shortage of housing supply while the total demand of the whole market in Ho Chi Minh City is very large, the law of supply – demand has led to a continuous increase in housing prices for more than 5 years. Mr. Chau cited, Vietnam’s housing price index is more than 20 times higher than the average income of society, making it difficult for many households and individuals to create houses, compared to other countries. When industry is developed, the house price index is only 6-7 times higher than income.

Mr. Ngo Quang Phuc, General Director of Phu Dong Group, shares the same view that supply bottlenecks are one of the reasons why house prices have risen recently. If this bottleneck is promptly cleared, it can contribute to reducing the pressure of house price increases.

According to Mr. Phuc, most businesses that are project developers (investors) want to increase the supply of housing, implement projects as soon as possible to offer them for sale at affordable prices (affordable). ) in line with the needs of the market. However, when the project was put into practice, there were many difficulties in legal procedures leading to an unpredictably long project implementation time, resulting in many costs, causing housing prices to rise. When the conditions for the offer were to go up, the team went up.

Many businesses reflect that, in Ho Chi Minh City, the average time to complete legal procedures for eligible projects to sell to the market takes 5 years or even longer. This leads to a lot of financial costs as well as changes in the cost of materials, labor, and price slippage. Therefore, businesses cannot sell houses at the old price 5 years ago, but have to update the new selling price, which has added a lot of costs, leading to an increase in the selling price.

HoREA President added that to support the reduction of house prices, it is necessary to have the State’s hand to intervene in the construction and completion of mechanisms and policies to support the development of social housing and affordable housing. with the income of the majority of people in society. This is the segment of low-cost housing that serves low- and middle-income people, including cadres, civil servants, state officials, armed force officers, newlyweds, newly married people, laborers. movement and immigrants.

Vu Le