Housing market faces gloomy future
The housing market will continue to slump next year, Minister of Construction Trinh Dinh Dung told Thoi bao Kinh te Viet Nam (Viet Nam Economic Times)
The Prime Minister has approved the National Housing Development Strategy. What are the strategy's salient points?
It is possible to confirm that a long-term national housing strategy with specific orientations has been issued for the first time ever, targeting different groups of beneficiaries in society. Many views and new approaches have been given unanimous support by the Government such as: it is the responsibility of the State, society and people to settle housing issues. This is a cornerstone of the Party and Government's stance on developing a socialist-oriented market economy. Along with building policies suitable for the development of a commodity-based housing market that meets the demand of those who can afford to pay market prices, we need to focus on developing non-commodity housing (with the strong participation of the State) for the poor. There are eight groups of people encountering difficulties when it comes to housing – including those who contributed to the country's revolutionary cause, the poor, members of the armed forces, people with disabilities and the elderly, among others.
In a word, the national housing strategy will tackle social housing development in a clear manner.
What will the Ministry of Construction do to stimulate the housing market?
The issue has been pinpointed in the strategy and in a prime ministerial instruction on housing market management solutions. Social housing norms must mingle with the plans of central and local governments. The Ministry of Construction is a Government office entrusted with the task of building policies. Yet, it depends on how solutions are implemented to say if these policies will come into life or not. The ministry cannot work alone, it must start with the cities and provinces. They firstly need to complete laws and regulations on housing. Secondly, good planning is needed. In the past, planning did not attach special attention to social housing. This issue will be covered in a draft decree that the Ministry of Construction is compiling and going to submit to the Government for consideration. In addition, the ministry is working on establishing a house savings fund, which is scheduled to be submitted to the Government early next year.
A shortage of funds and a stagnant real estate market are adversely affecting construction and housing enterprises. What can be done to rectify the situation?
The situation correctly reflects the market situation. However, a stagnant property market negatively impacts the economy. The causes are varied – State management as well as institutional and investor-related problems. In a market economy, we must respect market forces – supply and demand, value and competition. That should be coupled with State intervention. Enterprises must be competitive, and a competitive environment will result in some prospering and some going bankrupt. The real estate market is part of the macroeconomy. As such, it is greatly affected by the difficulties faced by the world economy, together with internal issues. During this period, enterprises must try their best to compete and restructure to survive. They must stand on their own feet and compete in a harsh market environment. Many enterprises will go bankrupt if effective measures are not found. The Ministry of Construction has already proposed measures to the Government aimed at easing difficulties and reducing interest rates for construction enterprises. In reality, the Government has issued many measures to address the difficulties being faced by businesses.
What is the outlook for the real estate market next year?
The economic difficulties being experienced by the country will continue next year, despite efforts by the Government to curb inflation, stabilise the macroeconomy and ensure the social welfare of the people. The Government does not expect to see high growth next year and this will directly impact the real estate market. These difficulties will continue into 2012, at least for the first six months. — VNS