The question is whether the move would be discriminatory treatment, because all business fields would also like to be rescued after the pandemic and amid the fluctuations of interest rates and exchange rates.

Senior expert Tran Dinh Thien said: “Never say we will just rescue the real estate market. If just focusing on rescuing the real estate market while ignoring other business fields, this will lead to the viewpoint that only rich people will be saved."

He explained that the real estate market has spillover effects and has a strong impact on business fields. Particularly, it has direct influences on the financial market and the banking sector.

Vietnam began opening the door after the pandemic and the economy began getting better. But worrying signs appeared.

On May 24, 2022, Hoa Phat Group organized the 2022 annual shareholders’ meeting and Tran Dinh Long, President of Hoa Phat Group, when asked by shareholders to pay dividends in cash, said: “Hoa Phat is just a cell in the economy. Everybody, please wait for the business results of Q2, 3 and 4. I think the business performance this year will be difficult. You will see how bad the business performance will be because of the unfavorable conditions."

After that, Hoa Phat announced a plan to close two out of three blast furnaces in Hai Duong and two out of four furnaces in November, and one more in December if the market demand did not improve.

The cost for stopping operation of one furnace would be VND40-50 billion and seven working days to make it operational again.

To date, Hoa Phat’s revenue and profit have been decreasing sharply. And this is happening with a series of other steel manufacturers. Pomina, for example, has announced it will stop BOF operation and Thep Mien Nam has announced an output cut.

Steel is not the only industry with relations to the real estate sector. In his study, Dr Doan Van Binh from the Vietnam Real Estate Association, found that the sector makes up 13.67 percent of GDP.

The sector has spillover effects to 40 important business fields, such as finance and banking, construction, industry, tourism and accommodation. If the real estate sector increases by VND1 trillion in value, the production value of these business fields could stimulate up to VND1.192 trillion.

A report from the Ministry of Construction (MOC) showed that the number of commercial housing projects is still limited, which shows that there has been no improvement in supply.

It is estimated that 12,000 commercial products were completed in the first nine months of the year, the same as the first nine months of 2021. Most of them are old projects, and there are few new projects.

Thirteen social housing projects with 6,000 units for low income earners in cities and factory workers  throughout the country have been completed.

The figures are small  compared with the demand amid rapid urbanization.

The Prime Minister has issued directives and decisions to recover the real estate market. There are many different sectors, including resort real estate, industrial real estate, housing and real estate for lease,. Not all of them are subject to ‘rescue’.

Some analysts hope that, as the credit growth rate ceiling has been lifted, the economy will have more than VND200 trillion and part of it will go to the real estate market. However, this is just part of the solution.

The real estate market and real estate firms cannot be rescued with money, but only with policies and laws. The market will correct itself on the basis of the policies.

In addition, the real estate market needs restructuring and prices need to decrease. The State should offer a reasonable interest rate subsidy program to help people buy houses for accommodation, which would help increase total demand and purchasing power in the market. 

Lan Anh