Cheap commercial houses need supporting by the State, don’t they?

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Enterprises should contribute to the development of affordable housing.

There are no incentives for cheap commercial house

With the growing demand for affordable housing in urban areas, the National Strategy for Housing Development to 2020 and the vision to 2030; Medium and low income housing funds. Up to now, according to incomplete statistics, the average housing area has reached about 4 million square meters, equivalent to nearly 40% of the requirements under the National Housing Development Strategy. This shows that the potential of this segment is very large and continues to grow annually, especially in big cities or megacities such as Ho Chi Minh City and Hanoi.

However, it is a fact that up to now, in the segment of affordable housing, social housing alone has received a lot of support from the State in accessing the land fund, tax support, credit support for investors as well as home buyers. With low-cost commercial houses, most investors have to manage themselves.

According to Mr. Nguyen Van Dinh, general secretary of the Vietnam Real Estate Association, the State does not have many policies to support and encourage investors to invest heavily in the segment of commercial real estate. . In addition, due to the high price of land and land use fees in the areas close to the city center, it is almost impossible to develop affordable commercial houses, it is likely that investment is in areas far from the center.

Emphasizing the need for state support for low-income people to buy houses, economist Nguyen Tri Hieu said that providing interest rate support loans to housing investors and buyers is essential in today's socio-economic context.

According to the expert Nguyen Tri Hieu, Vietnam's average per capita GDP is about $ 2,500 / person / year, while in the US $ 60,000 / person / year, it is 24 times higher than that of Vietnam. With such high incomes, homebuyers in the United States get 30 year bank loans with a fixed interest rate of 5% per year, while in Vietnam, the interest rates of commercial banks are 8.5% for the first 12 months and 12% for the next two years. "Assuming that the buyer bought the apartment for 1 billion and borrowed 700 million, then at the current interest rate, in the first five years, each month both principal and interest payable to the bank is more than 10 million. Thus, the total income must be at least double the amount paid each month, the amount is very large, while the majority of Vietnamese workers only have income of around 5-6 million per month. In my opinion, for low-income workers to have a chance to own a house and stabilize social security, interest rate support for low-cost homebuyers is a prerequisite in economic and social conditions in Vietnam, now," the expert said.

Mobilize capital from multiple sources

Agreeing with the view that the State supports enterprises by helping to connect existing infrastructure, but from another angle, Assoc. Prof. Dinh Trong Thinh (Financial Academy) said that once the issue of preferential interest for the segment of cheap housing is done, businesses have to accept the rule of supply and demand.

"I think it is impossible for investors to sell the house to get interest, but they do require State incentives. Regarding the capital, I think that businesses do not expect much support from the State and should not expect banks to lend at low interest, because when banks trade, they must calculate their economic benefits. Enterprises need to find other ways to source capital from the capital market to develop their project," said Associate Professor Dr. Dinh Trong Thinh.

According to Prof. Dang Hung Vo, former Vice Minister of the Ministry of Natural Resources and Environment, we have not been able to mobilize all resources and use the experiences of other countries for both low cost and social housing. Social housing projects are the "shortage" after the concessional credit package ends, is a testament to it. According to Prof. Dang Hung Vo, a new low-cost commercial housing developer is the main solution, the most effective solution to address the housing needs of the majority of people and the need to continue to build mechanisms for commercial housing with cheap prices to solve social problems, instead of following the social housing development policy that is more subsidized as today.

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"We need to find ways to mobilize more resources, not to look at state support, meanwhile the level of support is not enough with the very low incomes in Vietnam today, and housing is in very short demand. The resources here may include philanthropic funds from domestic and foreign billionaires, from the corporate social responsibility of corporations, from social organizations and even from social donors," proposed Prof. Dang Hung Vo. Mr. Vo also emphasized that before the credit from the Government becomes very limited, we can think of some ODA from the World Bank, Asian Development Bank ...

Many opinions also suggest that low-cost housing development funds should be formed and the contribution of businesses, commercial banks, social organizations and wealthy individuals should be encouraged. Low income people have to contribute to this fund to a certain level, they can buy cheap housing. Commercial housing projects must contribute to this fund equivalent to 20% of the project's housing value to develop affordable commercial housing, their contribution will equal zero with the benefits from so many development programs.