At the Vietnam Real Estate Summit 2023 held by Batdongsan.com.vn in HCM City last week. (Photo courtesy of the organiser)Speaking at the Vietnam Real Estate Summit 2023 held by Batdongsan.com.vn inHo Chi Minh City last week, Nguyen Quac Anh, deputy general director of theproperty listing platform, said the Vietnamese real estate market in 2023 hasbeen experiencing positive changes and mirroring a previous cycle.
Specifically, real estate inventory increased strongly whileprices slumped in the 2008-2012 period, until a reversal signal appeared 2013when credit was loosened, and a 30 trillion VND credit support package and theAmended Land Law were passed to support the real estate market.
Currently, in terms of interest rates, the State Bank of Vietnamhas adjusted the ceiling deposit interest rates three times and lowered thepolicy interest rates four times this year. Many commercial banks have reduceddeposit interest rates by 3-5% compared to the beginning of the year.
Credit growth of the entire banking sector reached 8.21% as ofNovember 22, lower that the credit growth target of 14-15% for this year.
In addition, the Law on Real Estate Business and the Law onHousing were passed last month, and will take effect from the beginning of2025, while the Government's policies to support thesector will boost the market, he said.
He predicted that the real estate market will show signs of aturnaround from Q2 to Q4 next year, with liquidity coming from apartmentproducts meeting real housing needs.
The market will enter a consolidation period from Q4 2024 toQ1 2025 under the condition that monetary tools and policies arepromoted on a large scale, helping to overcome difficulties in terms of capitalresources. In addition, the Law on Real Estate Business and Law on Housing,which will take effect from the beginning of 2025, will contribute to freeingup money sources and resolving regulatory issues to create motivation for themarket to develop in a sustainable manner.
The market will then enter a period of prosperity from Q2 to Q4 of2025, he said, adding that this period will record strong economicdevelopment. Investors’ financial capacity and the monetary environmentwill also improve, leading to a strong recovery in supply and liquidity inthe market.
He also forecast that the market will enter a stabledevelopment period after the first quarter of 2026. At that time, themarket will continue to enjoy good growth in terms of liquidity and prices, andmany real estate products will appear, he added.
Worst of the downturn has passed
In his recent report, Michael Kokalari, chief economist atVinaCapital, said: “The downturn in Vietnam’s real estate market has bottomedout, partly because mortgage rates peaked and are now headed lower. Whilea full-scale revival in the market is not likely to take root until mid-2024,there are some signs that a rebound is already in the making, includingsignificant increases in the prices of prime properties in downtown HCM Cityand Hanoi and a pickup in the volume of land lots changing hands.”
“The latter is a segment of the market which had been completelydead for months, and the recent activity is a good indication that long terminvestors (as well as speculators) have started paying attention to the realestate market again,” he said.
He also highlighted that the prices of new housing units offeredfor sale in HCM City and Hanoi are about flat year-on-year, but developers arereportedly offering mortgage assistance (e.g., extended grace periods) andother incentives to sell their units.
Furthermore, prices of apartments in the secondary market forwhich the seller does not have clear legal ownership status have seen a drop ofcirca 10%.
This is just one example of how legal and regulatory issuescontinue to be the main impediment to real estate development in Vietnam.
“While there has been some recent incremental progress towardsresolving those issues, we do not expect meaningful progress until well into2024; although we see green shoots in Vietnam’s real estate market, a fullrecovery is by no means underway yet,” he said.
At the beginning of November, senior government officials heldhigh profile meetings with major Vietnamese developers to address issues thatare impeding real estate development. Industry executives identified legal andregulatory issues as the source of most of the industry’s current difficulties,identifying inconsistencies in the current regulations and legal framework asparticularly problematic.
Two weeks later, Prime Minister Pham Minh Chinh set up a specialgovernment task force to address those issues. By the end of November, newlegislation was enacted to clarify certain specific issues such as the exactoptions developers have in order to fulfill their obligation to produceaffordable/social housing, and how much of a deposit developers areallowed to collect from home buyers before a project’sconstruction commences.
“We also remain hopeful that the Government will take thenecessary measures to alleviate the legal and regulatory bottlenecks thatcurrently impede development activity in Vietnam. A recovery in the marketwould have broader implications for the overall economy, not just for realestate developers, and would go a long way toward boosting consumer confidencein Vietnam, which would in-turn also help support stock prices next year,”Kokalari added./.
VNA
