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Credit squeeze to make housing cheaper: Ministry
The government’s diktat to cut lending to the property sector will force the latter to restructure to survive, making housing more affordable, Deputy Minister of Construction Nguyen Manh Ha says.
Why will those policies make housing more affordable?
As realty investors want to sell as fast as possible to recoup their investment for … reinvestment and loan repayment, they have to scale down prices.
But many say that tightening credit flow into the sector will affect the liquidity of the market, limiting transactions …
Those policies will have their side effects, but they will help realty firms restructure themselves and offer greater choice of affordable realty products.
It means the market will restructure itself to cope with the new circumstances.
I personally think there will be more successful transactions and the liquidity of the market will be better due to the volatility in forex and gold prices.
But with a limited credit flow into real estate, supply will drop, leading to higher prices …
Credit flow constraints will not have an immediate effect since it often takes a realty project two or three years to complete, even five to 10 years with big ones.
It is a characteristic of this market, in contrast to other goods and services where tightened monetary policies will have an immediate impact.
The Hanoi market now seems indifferent to these policies since capital inflows are from individual and family savings, while the Ho Chi Minh City market could see more recognizable effects since capital is mainly sourced from banks.
But the average price of such houses in the capital is around VND14 million a square meter, so does the ministry plan to regulate floor and ceiling prices?
What the ministry has done is to ensure that investors have a minimum return of 10 percent so that they can continue with their work, and local construction departments must be responsible for finding qualified investors.
Low-income people too have to make payment in one lump sum though regulations allow them to pay in installments. What do you think about it?
Since we lack policies offering financial support to developers of low-income housing projects or low-income people, it is natural that investors cannot wait 14-15 years to get back their investment.
Since lending for housing is not a priority now, will the development of low-income housing stall?
No, it is just completing the administrative and lending procedures that matters.
The Vietnam Development Bank has reported that it has sufficient funds to lend to low-income housing developers. So finish the procedures and everything will go smoothly.
If the government’s Resolution 11 to cut funding to the realty sector is implemented, how many projects will be suspended?
The resolution aims at tightening capital flows into the sector but does not say how many will be halted since it will depend on their effectiveness.
For example, high-class housing projects that cost a large sum of money and serve a handful of people should be suspended. But low- and middle-income housing projects should be given a boost to meet rising demand.
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The government has set a target of raising the average living space per capita to 25 square meters by 2020 and 30 meters by 2030.
This was revealed at a conference on a national housing development strategy from now through 2020 held by the Ministry of Construction and the United Nations Settlement Progam (UN-Habitat) in Hanoi Tuesday.
By 2030, Vietnam hopes to narrow the gap in housing quality between rural and urban areas, focusing on construction quality and conveniences. |
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