Chairman of HoREA Le Hoang Chau: To Lower Housing Prices, All Costs Must Be Reduced Simultaneously, Including a Special Type of Expense

At the conference announcing the decision to consolidate the Central Steering Committee on Housing Policy and the Real Estate Market, Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, emphasized that the real estate market has entered a recovery and growth phase since Q1/2024. “This trend is irreversible, so we have confidence in the social housing market,” Mr. Chau stressed.

According to the Ministry of Construction’s report, there are currently 692 social housing projects underway, comprising over 600,000 units. However, to achieve the target of 1 million social housing units, an additional 300,000 units are needed. Mr. Chau believes this will create a “wave” of supply in the coming years, addressing the housing needs of middle and low-income groups.

A key tool is the VND 145 trillion credit package from 9 commercial banks. Mr. Chau highlighted that this is a voluntary commercial credit package, not a preferential one, with Vietcombank contributing VND 30 trillion. However, the package has not been disbursed due to legal hurdles in the projects. He expressed confidence that with upcoming specific resolutions, pilot resolutions, and legal amendments, “the VND 145 trillion package will be disbursed soon.”

Another notable point is the amendment of Decree 100 on social housing. Mr. Chau stated that the Ministry of Construction has proposed adjusting income criteria: VND 20 million/month for an individual, VND 40 million for a couple, and VND 30 million for an individual raising a child under 18. “We fully support this proposal,” he affirmed.

Regarding loan interest rates, he suggested reverting to 4.8%/year, previously approved by the Prime Minister for the 2021–7/2024 period. Currently, the Vietnam Bank for Social Policies applies a rate of 6.6%, higher than the commercial rates of some banks like Vietcombank (5.9–6.1%).

“We urge the Prime Minister to reinstate the 4.8% rate, with Hanoi and Ho Chi Minh City allowed to set higher rates as needed,” he emphasized.

Mr. Chau argued that to reduce housing prices, costs must be cut across the board: land use fees, construction costs, input costs like sand, gravel, steel, cement, electricity, fuel, and compliance costs. “Especially the opportunity costs due to prolonged administrative procedures,” he noted.

Another critical factor is corporate profit expectations. He stressed, “We call on businesses to share by lowering profit expectations to a reasonable level.”

Despite challenges, Mr. Chau expressed confidence in the real estate market’s future. “There’s a lag in policy implementation and project development, but we believe that with institutional reforms and reasonable credit policies, the market will recover more robustly,” he shared.

Regarding property prices, Prime Minister Pham Minh Chinh noted that the housing segment remains inadequate, with products primarily in the high-end segment, sometimes surging, especially in major cities.

Thus, the Prime Minister called for clarity on whether “the real estate market is being manipulated” to address hoarding, price hikes, and market distortions. He emphasized the need to address the issue of “continuously rising and persistently high condominium prices.”

“So many people need housing but cannot afford it due to high prices. Condominiums priced at VND 70 million or VND 100 million per square meter—who can afford that?” the Prime Minister said at the meeting.

The Prime Minister stated that the real estate market is a vital channel for capital mobilization and allocation, with significant ripple effects on other economic sectors, contributing to improved living standards. However, challenges persist in land, bidding, site clearance, and resettlement.