Thu. Feb 22nd, 2024

The real estate market’s recovery will be led by low-cost housing and
land plot segments this year, according to market analysts.

They say their assessment is based on rising demand for these kinds of
properties and the government’s recent changes of policies encouraging
development of these market segments.

The prolonged
economic slowdown has seen a sharp fall in demand for luxury homes.
Also, increasing competition in this segment has seen many developers
shift their focus to affordable homes so as to meet market demand and
diversify their risk.

There is a huge gap between demand
and supply of low-cost homes. By 2015, the total housing shortages in
urban areas is estimated at 891.8 million square metres, more than
three-fourths of which will in the low-income segment.

To
meet the market demand and help real estate developers settle their
inventory problem, ministries and sectors have started implementing
several new policies, particularly supporting development of the
low-cost housing segment.

One of them is the Ministry of
Construction’s Circular No 02/2013, which allows enterprises to change
the apartment structure of commercial housing projects to make them more
affordable.

Other policy incentives include a decision to
set up a Real Estate Investment Trust (REIT) this July that would,
according to Deputy Construction Minister Nguyen Tran Nam, help mobilise
idle money from society and ease the current capital shortage in the
real estate market.

These policies have been welcomed by
both individuals and enterprises because changing the apartment
structure creates more opportunities for low-income earners to buy
apartments, while the trust fund will help developers mobilise much
needed capital for their projects.

However, the main
catalyst in reviving the local real estate market is likely to be the
recent cuts in lending rates, experts say.

Dang Hung Vo,
former Deputy Minister of Natural Resources and Environment, said the
lower lending rates would have an impact on people who really need
houses to live in as opposed to making speculative investments.

There would be more people who want to take advantage of this
opportunity and withdraw their savings from banks to buy houses, he
said.

Many commercial banks have already lowered the
deposit interest rates to around 7.5 percent per year, suggesting that
lending rates could drop to 10 percent per year as the central bank
expects.-VNA

By vivian