Stimulating investment in affordable housing where demand has been high for years is an ideal solution to unfreeze the property market, analysts say.
The government is set to propose to the National Assembly a credit package of VND110 trillion ($4.64 billion) to fund social housing and worker home projects.
Half of the package is set to be given to property developers as incentive loans while the other half will go to homebuyers.
Another credit package of VND120 trillion from four state-owned banks with interest rates lower than market average by 1.5-2% points has also been approved by the State Bank of Vietnam (SBV).
Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association (HoREA), said that the packages are expected to bring about positive changes. If imposed quickly, it could help shorten the gap between supply and demand in the property sector.
In the last two years there has been no new affordable housing project in HCMC while there is a shortage of social housing apartments, he told VnExpress.
Industry insiders have repeatedly said that apartments priced under VND30 million per square meter have “disappeared” in HCMC, while the Ministry of Construction last year confirmed that there are no apartments in Hanoi priced under VND25 million per square meter.
Property developers for years have been pouring their investment into high-end projects to gain larger profits, which has created a disparity in supply in big cities.
Policies encouraging companies to build more affordable projects will help create a nudge in the property market and move it toward serving people with real needs instead of speculators, Chau said.
He said further that apart from stimulating investment in social housing, there should be incentive loans given to first-time homebuyers for apartment priced VND1.8 billion or less.
The demand for affordable housing is large, Chau said.
Huynh Phuoc Nghia, an expert with consultancy firm GIBC, said many countries have successfully helped their property market overcome challenges by steering policies toward boosting the affordable segment.
Vietnam achieved such result in 2013-2016 when the government gave out a VND30 trillion credit package for social housing loans, he said, adding that strict supervision of the policies is key to increasing efficiency.
Property analyst Le Quoc Kien said that the planned packages could help “unfreeze” the property market in which many speculators have been buying land lots and leaving them empty just to wait for prices to surge.
Helping people with real residency demand to have a home is the best way to revive the property sector, he added.
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