The real estate market has many flaws

In the past 5 months, real estate prices have continued to increase rapidly despite weakening liquidity, project supply is still limited due to prolonged legal problems, land fever occurs from rural areas, coastal areas to the Central Highlands. This fact makes experts worry that the market will develop skewed, distorted, and unsustainable.

Share with VnExpress Recently, Mr. Huynh Phuoc Nghia, GIBC Senior Consultant, assessed that in the long-term view over the past 3 decades, the current real estate market “reveals many defects and distortions”.

The first is that housing prices have skyrocketed, people’s incomes cannot keep up. While the supply of housing for low-income people is seriously lacking, the market tends to only supply many types of high-priced houses (mid-high-end to luxury, super-luxury). This supply imbalance can lead to a housing shortage for the majority of low-income people living in big cities.

Next, according to Mr. Nghia, is the situation in which all sectors of the economy are putting money into collecting land, keeping land to wait for price increases, not producing and trading, not creating any surplus value. From rural areas, coastal areas to mountainous areas and the Central Highlands, there is a situation of gathering agricultural land, subdividing plots and selling plots to make a profit. The technology of land consolidation waiting for price increases to explode with land fevers, the more it stifles the competitiveness, creativity and flexibility of the economy.

“Land resources are not used, but just lie still waiting for time, leading to wasted land resources,” Mr. Nghia said.

GIBC experts assessed that, besides the deviant and distorted development of the real estate market, the financial market that is the midwife for the property market also operates less transparently. Over the past time, the financial market has been a tool to provide capital for the real estate market, but there are many cases where real estate enterprises with weak financial status still use financial leverage in many forms (borrowing capital, raising funds for the real estate market). mobilize capital, issue bonds…) to collect land, hoard land to wait for time, creating inertia and being a huge barrier for the economy.

According to Mr. Nghia, credit institutions and the financial market have contributed to the deviant development of the real estate market over the past time. Therefore, the Government needs to review and correct these two markets to make the economy healthy.

At a seminar on removing obstacles and promoting investment in the real estate sector on May 27, Mr. Tran Du Lich, Vice President of the Vietnam International Arbitration Center, recognized real estate as a one of the important links, making great contributions to the economy, but many defects and distortions have appeared.

In Mr. Lich’s point of view, considering each segment, each type of property, completed projects, and people living in the east, it proves that this property segment has a real need, certainly there is no concern about bubbles. shadow. As for the projects on paper, which have not yet been finished products but have increased in price quickly, large project collateral, like the foam of a beer glass, can be an asset group to be cautious of.

Lich confirmed that there is a non-transparent connection between the real estate market and the financial market. In the past 50 years, every problem in the economy has stemmed from the chaos of these two markets. In the coming time, the Government tends to healthy both the real estate market and the financial market.

He also mentioned the fact that “home owners, real estate people” while professional investment institutions do not have. There was a proposal to build these institutions 15 years ago, but so far it has not come to fruition.

“From a macro perspective, the price of land across Vietnam has now exceeded the tolerance of the economy. The current land price is also beyond the tolerance of the people”, Mr. Lich commented and said that the task of the The current government is to control land prices, control investment prices and increase housing supply to stabilize the market.

In the past time, lengthy procedures have caused the supply of housing projects to be in short supply, greatly deviating from demand. If the supply-demand imbalance persists, the shortage of affordable housing in the affordable segments will lead to an unreasonable increase in house prices.

Mr. Le Hoang Chau, Chairman of Ho Chi Minh City Real Estate Association (HoREA) also agreed with the above experts. First of all, the long delays and obstacles in legal procedures have pushed housing projects into inventory and capital but could not produce finished products. The projects with legal problems that HoREA statistics to report to the People’s Committee of Ho Chi Minh City for consideration and settlement are increasing and are expected to continue to increase.

In addition, the supply-demand mismatch, an excess of high-priced housing, and a shortage of affordable housing for the vast majority of low-income people have been pushed to the climax in the context that housing prices continue to escalate. In Ho Chi Minh City alone, there are more than 900,000 people who are laborers who are renting, renting, and needing to settle down, but in the last 2 years, the supply of affordable housing (affordable segment) has decreased sharply. Statistics in 2021 have no affordable housing projects put on the market while high-end and luxury homes are still growing.

Mr. Chau commented that the supply of houses in the whole market had decreased sharply due to the lengthy legal procedures, which further contributed to the increase in house prices due to monopolistic competition. At its peak, in 2017, about 30,000 homes were put on the market. From 2020 until now, the market has been short of supply and usually only about 16,000 units have been sold. The less the supply, the harder it is to create finished products, the more businesses tend to make high-end houses to optimize profits. The reduced supply also affected housing consumption.

HoREA President also acknowledged that housing prices have increased sharply during a period when the economy is facing many difficult challenges due to the impact of the epidemic and will continue to increase in the first months of 2022. This development leads to concerns. fear that house prices are exceeding the threshold of people’s payment. This requires the State to soon complete policies to support the affordable housing segment, housing for low-income people, contributing to stabilizing the housing market.

Mr. Chau explained, in its heyday, the real estate market was a swallow that signaled the spring of the economy. However, when entering a difficult period, the real estate market is a storm bird, signaling a challenging cycle.

With a special role, estimated to contribute around 20% of the economy’s GDP, the real estate market needs more attention from the Government, promoting reform of legal procedures, amending the relevant legal system. , creating a foundation for the market to develop healthily and sustainably,” said Mr. Chau.

Vu Le