Real estate bailout may not be helpful: state officials
Real estate bailout may not be helpful: state officials
A proposed real estate bailout plan may do more harm than good, as current market prices do not yet reflect the real prices, said a senior state official.
“People who buy a house at current prices have to bear numerous costs, so if the bailout package doesn’t go to the right address [the homebuyers], it will just help add more burdens,” said Mai Xuan Hung, Vice Chairman of the National Assembly’s (NA) Economic Committee, at a recent seminar.
The event was held to prepare for an upcoming Q&A session on the realty bailout plan that has been proposed by the NA and other state agencies.
Hung said he recently attended the groundbreaking ceremony of an apartment building for the Ministry of Public Security in the outlying Lang - Hoa Lac area in Hanoi.
The building’s investor is an acquaintance of Hung, and he confided that though the common price of an apartment there is VND13.5 million/m2, the first affordable rate for such a building in that location, the investors still enjoy a sound profit rates.
“From the story, we can draw a very important question: are current real estate prices reasonable or not? And are they in accordance with the purchasing power of the market or not?” Hung said.
“If the market price does not match the buying power of the market, if we can stimulate demand by lowering lending interest rate for homebuyers to 3% or 5%, this is still nearly twice as high as realty sector in other nations," Hung said.
NA delegates Tran Xuan Hoa, chairman of Management Board of the Vietnam Coal and Mineral Industries Group, and Le Nam, from northern Thanh Hoa Province, questioned the leaders of the Ministry of Construction over whether a bailout is necessary.
“There are interest groups pegging the prices of apartments, waiting for the coming rescue package, so the problem is whether we come to the rescue or just let the market regulate itself, considering it a natural process of social redistribution of assets,” Hoa said.
“Simply letting the self-regulating mechanism of the market work out will benefit more people,” Nam added.
Obscure rescue plan
The estimated value of the total unsold real estate stock in Hanoi and Ho Chi Minh City alone is about VND111 trillion ($5.33 billion), while that of the whole country may amount to some VND207 trillion ($9.94 billion), Minister Trinh Dinh Dung shared, quoting anofficial report from the State Bank of Vietnam (SBV).
The central bank’s data has stirred up concerns, since it is incomplete and only collected from the reports of banks in provinces and cities nationwide.
However, the SBV’s data on the real estate credit balance does not include other consumer loans,” Dung said, adding that if all real estate-related loans are taken into account, it may be up to VND1,000 trillion ($48 billion).
The incomplete numbers collected from 50 provinces and cities nationwide show that the inventories include 42,230 units of housing, 92.800m2 of office space for lease, 98.407m2 for business centers, 792.2 hectares of land plots for housing, and 195.1 hectares of other commercial land.
But the inventory figures above do not reflect the real situation, the ministry said.
Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, said discussing the rescue plan without precise data would be the same as giving a prescription to a patient without knowing what is wrong with him.
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