The economic downturn in the aftermath of the COVID-19 pandemic has put a strain on Vietnam’s real estate market. The country’s authorities are responding to the situation and taking measures to restore the residential sector.
According to Deputy Minister of Construction Nguyen Tuong Van, in recent years, the construction sector has accounted for an average of about 11% of GDP, of which only 4.5% is directly made up by the real estate industry. Foreign investment could help strengthen the market.
To date, the volume of foreign direct investment in the real estate sector has reached $66.4 billion. Investments are made by representatives of 48 countries. The costs of supporting the housing stock account for 15.1% of all foreign investments in the state, but this volume is not enough to stabilise the market.
Nguyen Tuong Van said that the Ministry of Construction has presided over developing amendments to the Law on Housing and the Law on Real Estate Business. They play a leading role in regulating the flow of real estate and help attract potential overseas investors.
The same opinion is shared by Nguyen Anh Tuan, editor-in-chief of the authoritative publication Nha dau tu. He argues that the legislation as it is now does not contain comprehensive rules for regulating real estate and amendments would contribute to positive reforms in this area. Changes to legislation will make the real estate market as transparent as possible, which will lead to an increase in investment capital.
In addition, Vietnam’s credit policy also needs regulation, since the demand for mortgage loans is currently extremely low. With flexible management, this situation can be changed for the better, making housing more accessible to a wider audience. The optimal solution would be to reduce lending interest rates.