Property-related credits put at VND1,000 trillion

HANOI – The total amount of real estate-related loans is standing at around VND1,000 trillion, said Minister of Construction Trinh Dinh Dung at a session of the National Assembly on Wednesday.

As of end-August, property outstanding loans had amounted to VND203 trillion, in which bad debts made up 6.6%, said Dung, citing a report of the central bank.

Counting property-related credits, including property trading loans, loans for investment, production and business and realty collaterals, property-related outstanding loans account for some 57% of the total outstanding balances of the economy, equal to VND1,000 trillion, or roughly US$49 billion.

The information given by Minister Dung is the same as that provided by NA Chairman Nguyen Sinh Hung at a meeting of the NA Standing Committee two weeks ago.

There are now nearly 2,400 real estate projects nationwide, covering a total area of some 71,000 hectares. In Hanoi, there are 368 projects with about 20,000 hectares set aside for them, in which 8,000 hectares, 40%, are occupied by 233 ongoing projects, said Dung.

He added some 16,400 apartments, 4,100 low-rise houses and 25,800 square meters of office for rent remained unsold.

“Most property products are of high- and mid-end, while the products for low-income people are very few,” said the minister.

Funds for real estate projects are mainly sourced from banks and homebuyers. Therefore, when the market is frozen with high volume of unsold products, property bad debts shoot up, causing many troubles, Dung remarked.

He informed the Government was compiling legal documents concerning management of urban development and property trading.

Under Directive 2196 of the Prime Minister, multiple projects in Hanoi have been halted.

Dung said 60% of the projects in Hanoi had not carried out site clearance, so the project owners were forced to restructure their projects to increase the supply of low-cost houses.

He asked the central bank to loosen credit for realty investors and homebuyers, especially buyers of low-cost houses.

In addition, he proposed the NA offer VAT reductions and exemptions for those buying low-cost and commercial houses for the first time. In addition, low-cost house developers should be provided with the highest corporate income tax incentives.

The minister suggested the NA allow real estate traders to pay land use fees in accordance with their sale and leasing progress.

Localities, especially HCMC and Hanoi, were requested to focus on removing difficulties for businesses and facilitating the process of project restructuring.

The inventory of building materials is surging due to investment decline. The unsold volumes of tile, glass, baked and unbaked building materials are equivalent to their two-month outputs.

Cement inventory is estimated at 2.57 million tons, equal to a 17-day output, which is said to be relatively safe. Cement plants are still operating at 85% capacity.