The government should use its land and capital resources to develop low-cost real estate projects and help bring down home prices in Vietnam, senior officials and experts say.
Pham Dinh Cuong, head of the Ministry of Finance’s State Property Management Bureau, said the government should take the role as an investor and develop a series of cheap residential projects.
Once a more reasonable price level has been established, other developers will follow suit and offer properties at lower prices, he said.
Cuong said the government can also invest in real estate by buying apartments to support developers who are now sitting on a large inventory due to the market downturn. Boosting demand will help the market recover, allowing developers to recoup their investment for future projects.
Lawyer Le Hieu Dang said the government can issue favorable policies for state-owned construction companies to build affordable houses. Other private companies, in order to survive, will try to compete with cheap prices too.
He said property firm Hoang Anh Gia Lai has forced many other developers to reduce prices with its 20 to 40 percent price cut, so the government can also do the same.
“The government has to take charge of building houses via state-run companies,” he said.
Le Hung, general director of the housing development arm of Hoang Anh Gia Lai, said land prices now account for most of the value of a house. Only the government can bring land prices down to make housing more accessible to local residents.
The government can launch a project and then ask other companies to build it, Hung said, noting that with state involvement, housing prices could fall to 6-8 million per square meter, or around VND400 million for a medium-sized apartment.
Vietnam’s property market is caught in a deepening slump. According to the Ho Chi Minh City Real Estate Association, there has been a mismatch between supply and demand with developers unable to sell luxury homes while people with real demand are unable to find affordable housing.