HÀ NỘI — Housing prices in Việt Nam lack stability and are inflated beyond most citizens’ ability to afford them, according to the Ministry of Construction’s report submitted to the 14th National Assembly.

“Housing prices do not reflect the true value of property and far exceed affordability for a majority of citizens,” the report wrote.

“Real estate speculators still take advantage of information related to urban planning, infrastructure development and urban expansion to push up housing prices to gain illicit profits and destabilise the market.”

The ministry admitted that the real estate market lacked proper management and transparency.

The development of the property market lacks transparency from planning, selection of developers to transactions, the ministry said, adding that the market information system had not been developed adequately in order to meet the demand for management.

Construction Minister Phạm Hồng Hà said that it was necessary to review the legal framework to enhance management of the property market, especially the accountability of local management agencies in planning, project licensing and construction progress.

After three years of growth from 2013 to 2016, the real estate market has slowed down since 2017, according to the construction ministry.

Statistics show that real estate inventories totalled VNĐ23.7 trillion (US$1.03 billion) as of August 20, a drop by 82 per cent from the peak in the first quarter of 2013.

Inventories were mainly clustered at projects which were located far from the downtown areas with inadequate infrastructure.

The ministry also said that the development of social housing projects had been stagnant after the VNĐ30 trillion housing stimulus package in preferential lending ceased in December 2016.

Statistics show that more than 200 social housing projects with a total of 168,700 apartments are now under slow progress or have temporarily halted construction.

Risky investments?

The Ministry of Construction said that since 2015, the property products had become more diverse with the introduction of condotel and officetel. The ministry estimated that there were dozens of thousands of officetels and condotels being developed.

However, the ministry warned that these new types of property products had risks due to the lack of transparent contract rules.

According to the Việt Nam Association of Real Estate Brokers, the resort property market, especially condotels, recently saw a slowdown in supply and transactions.

Condotel transactions in the third quarter of this year totaled only 1,000 while in other quarters, the transaction numbers doubled or even tripled.

The association said that the investment capital for resort property was limited due to the policy of tightening credits for the real estate sector. In addition, the legality of condotels remained unclear.

Notably, resort property prices were high, at around VNĐ35-50 million per square metre.

The association said that it’s time to stop developing new condotel projects but focus on completing existing projects and putting them into operation to boost tourism infrastructure and consolidate investor confidence. — VNS