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Slow Progress on the VND120 Trillion Loan Package for Social Housing
The Ministry of Construction has recently published documents for the conference on reviewing the performance of the first half of 2024.
According to the documents, there have been eight completed social housing projects so far. From 2021 until now, there were 503 projects implemented nationwide, offering 418,200 units. Of these, 75 projects have been completed, providing nearly 40,000 units.
The proposal to invest in building at least one million social housing units aims to complete approximately 428,000 units in the 2021-2025 period. For 2024 alone, the government targets the completion of about 130,000 units. Therefore, the Ministry of Construction assesses that it will be “difficult to achieve the above target in 2024.”
Regarding the VND120 trillion loan package, the Ministry of Construction states that the disbursement progress has been very slow, with only 1% disbursed, equivalent to about VND1,234 billion. Of this, VND1,200 billion was disbursed to investors of 12 projects, meaning only over VND30 billion was disbursed to home buyers.
In addition, only half of the provinces and cities across the country have announced the list of projects in need of loans, mainly in Hanoi, Ho Chi Minh City, Bac Ninh, and Binh Dinh. The Ministry of Construction attributes this situation to the still-high-interest rates of the preferential loan package and the short loan term, which have not attracted enterprises and people to borrow capital.
Real Estate Market Shows Signs of Recovery
In terms of the real estate market, the Ministry of Construction states that the housing supply is increasing again after a period of limitation. In the first half of this year, there were 18 completed commercial housing projects, and 23 newly licensed projects. For projects that divide the land into plots for people to build houses themselves, there were 32 completed projects and 16 licensed projects.
The Ministry of Construction assesses that the real estate market has become more positive, with increased interest and higher search volume for real estate information from customers and investors. In the first six months, there were over 253,000 successful transactions, up more than 10% compared to the second half of last year, “concentrated in the land plot segment.” Additionally, reduced bank interest rates and favorable policies offered by developers have contributed to improved market liquidity.
In reality, although the most challenging period has been overcome, the real estate market still faces many difficulties. The operations of construction material enterprises and real estate businesses still face cash flow shortages and losses.
According to a survey by the General Statistics Office, nearly 31% of construction enterprises assessed that the second quarter was more difficult than the first. Almost 50% of enterprises had no new construction contracts in the second quarter. Moreover, the pressure of bond maturities remains significant. It is estimated that about VND279 trillion worth of bonds will mature this year, of which real estate accounts for nearly 42%.
In the last six months of the year, the Ministry of Construction states that the key task is to urge localities to implement the project to invest in at least one million social housing units and find solutions to increase the housing supply for low-income people to “balance supply and demand.”
Accelerating disbursement of the 120 trillion VND credit package for social housing
Deputy Prime Minister Trần Hồng Hà has recently issued directives regarding the implementation of the 120,000 billion VND credit package for investors and buyers of social housing, workers’ housing, and projects for the renovation and construction of apartment buildings.
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Once a formidable competitor in the stock market, the total market capitalization of the entire real estate industry is now less than the combined market capitalization of three banks.
If you combine the market cap of Vietcombank and BIDV, along with the market cap of Vietinbank (which is approximately 960 trillion VND), it already surpasses the market cap of the top 30 largest real estate enterprises (which is around 788 trillion VND).
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Challenging to Get Affordable Loans for Social Housing
The discrepancy between legal regulations and lending policies of banks has made it difficult for businesses to access favorable loans for social housing development.
