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The Ministry of Construction acknowledged that there is a mismatch between supply and demand because real estate businesses are most interested in investing in commercial housing projects at market prices.
Voters of Ho Chi Minh City have just proposed that the Government soon issue a Resolution on the “Project for developing low-cost commercial housing” with mechanisms and policies to support credit, tax, land access, and shortening procedures of construction investment… to provide low-priced commercial housing apartments with a price of about 20 million VND/m2 for provinces and about 23-25 million VND/m2 for grade 1 cities and special grade cities.
The supply-demand gap
Responding to voters’ petitions, the Ministry of Construction acknowledged that there is still a supply-demand gap because real estate businesses across the country are most interested in investing in commercial housing projects at affordable prices, serving high-income people. As a result, there is a lack of supply of low-priced commercial housing for low- or moderate-income groups.
People’s housing demand for the mid- and high-end housing segment (priced at 25 million VND/m2 or more) currently accounts for only 20% – 30% depending on each locality and urban area. However, the demand for affordable housing segment with low price (under 25 million VND/m2) accounts for 70% – 80% of the market.
Government’s resolution on solutions to encourage the development of low-priced commercial housing projects
Also according to the Ministry of Construction, in order to have a low-cost commercial housing fund, on May 29, 2020, the Government issued Resolution No.84 on tasks and solutions to continue to remove difficulties for production and business, promoting the disbursement of public investment capital and ensuring social order and safety in the context of the COVID-19 pandemic, in which the Ministry of Construction is assigned to preside over the formulation of the Government’s Resolution on solutions to encourage the development of low-cost commercial housing projects (apartment apartments with a size of less than 70m2, the selling price does not exceed 20 million VND/m2).
To carry out the above task, the Ministry of Construction has developed a draft of the Government’s resolution on solutions to encourage the development of low-priced commercial housing projects, which focuses on a number of incentives: land (reduced land use levy, delayed payment of land use levy); tax (VAT reduction, corporate income tax); on planning and arrangement of the land fund; construction investment procedures; capital mobilization mechanism… and send it to the Ministry of Justice for comments.
However, according to the opinion of the Ministry of Justice, preferential policies for low-cost commercial housing projects have not been provided for in the Land Law (exemption or reduction of land use fees), the Law on Housing (selecting the land use fee and the land use fee reduction). investors), Tax Law (VAT exemption and reduction, corporate income tax)… Government resolutions are not legal documents that will make it difficult for localities to implement if they are approved by the Government.
Therefore, in order to solve the above difficulties, the Ministry of Construction will report to the Government for consideration and permission to perform the task of “Elaborating the Government’s resolution on solutions to encourage the development of commercial housing projects” in the direction of: Assigning the Ministry of Construction to coordinate with relevant ministries and branches to continue studying policies to encourage the development of affordable housing for low- and middle-income people to amend , synchronously supplementing the Law on Housing 2014, the Law on Land and other relevant laws according to the law-making program of the National Assembly.
According to the report on the real estate market situation in the first quarter of 2021, the Ministry of Construction said that there are very few social housing and affordable housing projects with prices below 25 million VND/m2 in big cities, almost only in suburban areas, far from the center.
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