Vietnamese Prime Minister Pham Minh Chinh attends the “Shanghai Cooperation Organization Plus” Meeting in Tianjin, China, on Sept. 1. [XINHUA/YONHAP]
**Vietnam’s Housing Crisis: Calls for Construction Amidst Rising Prices**
Vietnamese Prime Minister Pham Minh Chinh has recently highlighted an urgent concern regarding the country’s housing market during a meeting in Hanoi. He noted that soaring real estate prices have made it increasingly difficult for many citizens to afford homes. This is a pressing issue, especially in major urban centers where the demand for affordable housing is high.
Chinh pointed out on state broadcaster VTV that “many people are in need of housing, but they can’t afford it because of high prices.” This statement not only underscores the growing concerns among citizens but also reflects the government’s awareness of the pressing need for affordable housing solutions.
**The Price Surge: A Closer Look at Real Estate Trends**
According to government data, real estate prices in Vietnam’s major cities, such as the capital Hanoi and the economic powerhouse Ho Chi Minh City, have risen sharply. In just this year alone, apartment prices have escalated by approximately 5.6%, reaching an average of 80 million dong per square meter (equivalent to around $280 per square foot). This increase poses a significant challenge for the average Vietnamese worker, whose yearly salary averages around 98.4 million dong, highlighting a substantial gap between income and housing costs.
**Economic Implications and Asset Bubble Risks**
Economists express increasing concern over potential asset bubbles, particularly in the real estate sector. These apprehensions are fueled by the government’s push for expansive credit to bolster rapid economic growth. As the country navigates its development, striking a balance between growth and sustainability remains crucial.
**Government Measures to Alleviate the Housing Crisis**
During the meeting, Prime Minister Chinh outlined a series of measures aimed at addressing the housing dilemma. He emphasized the importance of cutting costs and simplifying administrative procedures for real estate developers, making it easier for them to build. Additionally, he directed the central bank to formulate policies that enable reasonable interest rates for real estate loans, thereby increasing accessibility to housing finance.
Furthermore, local authorities were instructed to expedite the development of social housing projects, specifically targeting low-income earners. Chinh’s call for these initiatives reflects a broader strategy to bolster housing availability and ensure that economic growth is inclusive.
**Inflation and Consumer Prices: The Broader Economic Context**
Addressing concerns regarding inflation, Chinh affirmed the government’s commitment to maintaining inflation within a target range of 4.5 to 5 percent for the year. Recent statistics indicate that consumer prices increased by 3.24 percent year-on-year as of August, with particular spikes noted in rental and construction material costs, which rose by 6.99 percent. Such trends underscore the complex interplay between housing, consumer prices, and macroeconomic stability.
**Bank Lending and the Property Market**
Chinh also acknowledged that bank lending to the real estate market has recently increased, suggesting a responsive financial environment. However, he reassured stakeholders that nonperforming loans remain controlled, which is essential for maintaining confidence in the housing and banking sectors.
The combination of government initiatives, economic monitoring, and community-focused housing projects outlines a proactive approach to mitigating the housing crisis. Through focused action, the Vietnamese government aims to enhance the housing market and promote sustainable economic growth while keeping inflation in check.