Currently, both supply and absorption rates continue to decrease sharply compared to 2022, down about 66 per cent. According to Hoang Hai, director of the Department of Housing and Real Estate Market Management under the Ministry of Construction, the biggest issues have involved large gaps in product structure, the short supply of affordable housing, and oversupply in the high-end segment.
“Around 75 per cent of real estate businesses have difficulty accessing capital due to banks tightening lending conditions. Together with a reduced confidence from investors in the market, new capital injections are harder to mobilise,” Hai said.
He added that although the government has approved the new laws on housing and real estate, they will not be fully in operation until 2025. The new land law, meanwhile, is still being considered.
This year the government has implemented a range of solutions to support the market, such as reducing lending interest rates, stabilising the foreign exchange market, promoting disbursement of public investment capital, and implementing stimulus packages.
Especially for the real estate market, a range of solutions were taken such as tax and fee exemptions and reductions, as well as extensions for corporate bond payments.
“Some of these solutions to promote the market have had certain effectiveness. But we have to keep a closer monitor on those difficulties in order to create more suitable solutions to support the market,” Hai said.
Currently, banks are adjusting lending interest rates to create more motivation for investors to participate in the market.
Vo Hong Thang, director of Project Development and Consulting Services under DKRA Group, said that now could be considered appropriate for investors to return.
“One of the most important factors is that in 2023, a series of key public ventures such as urban belt roads, highways, and airports have started construction. The macroeconomy remains stable and inflation is controlled. All of those have a positive impact on helping the real estate market recover and grow again,” Thang said.
Subsequent changes in laws and investments focusing on the actual needs of customers will be the key to sustainable market development in the coming time, said Thang.
“Products that serve real housing needs will recover better. In particular, the affordable apartment segment for the needs of people in the city centre and outskirts areas will recover well, and the land segment will also focus on densely populated areas, with enough amenities and infrastructure,” Thang added.
Vietnam’s real estate market in 2023 has seen positive moves. In terms of interest rates, since the beginning of 2023, the State Bank has adjusted the ceiling deposit interest rate three times and lowered the operating interest rate four times. Many banks have sharply reduced deposit interest rates by 3-5 per cent compared to the beginning of the year.
In addition, the Real Estate Business Law and Housing Law were passed in November. Together with other related legal regulations, the real estate market will develop when these come into effect.
The real estate market also benefits from the government’s moves such as the decision to establish working groups to remove obstacles to public investment, a 2 per cent interest rate support package equivalent to $1.66 billion, and a $5 billion support package for social housing.
The real estate market will show signs of recovery from 2024, but the level of real estate recovery will be slow and different for each type.
Mid-range and affordable apartments will recover first because they meet the needs of the majority of home buyers. Land plots and town houses may be slower in the second and third quarters of 2024. The recovery of resort and commercial real estate depends on the growth trend of the economy, tourism and services, which may last until the end of 2024.
Le Hoang Chau, chairman, Ho Chi Minh Real Estate Association
Although the real estate market is still very difficult, there is absolutely a basis to firmly grasp the prospect of recovery and continued growth in the direction of safe, healthy, and sustainable development in 2024.
The working group led by the Minister of Construction. along with the participation of leaders from provincial people’s committees, will promote land resources, creating conditions for favourable access to capital and credit markets and aiding the removal of legal problems for about 1,000 real estate projects nationwide.
Another driving force is that the total demand for housing of the whole society is still considerable. Especially, affordable housing and social housing are being hunted by the majority of people with mid and low incomes. Meanwhile, the middle-income class is still continuing its steady growth trend. All of this is motivation for property consumption in the coming time.
Real estate businesses must be drastic in restructuring businesses, investments, and housing products towards real demand of buyers, and dropping house prices to a reasonable level so that the market can recover from the second half of 2024.
Nguyen Van Khoi, chairman Vietnam Real Estate Association
In the past six months, the real estate market has had positive changes. Besides that, buyer confidence is assessed to have gradually recovered. These are key factors to help the market recover.
The first two quarters of 2024 will see more positive bright spots in the market. It will enter a new recovery cycle and projects will be deployed more vigorously, increasing supply for the market. Among them, social housing and industrial real estate will still dominate the market with high and stable demand.
As for commercial housing, almost half of implemented projects are still encountering legal problems. The upcoming reform of the legal system will make it easier for projects to develop commercial housing projects.
Along with improvement in the legal environment, positive economic growth prospects, synchronous and modern infrastructure development, digital transformation trends, and the diversity of financial resources, the market will begin in an upward cycle in 2024. Therefore, this is also a good time for investors to attach themselves to good products.
Marc Townsend, chairman Arcadia Consulting Vietnam
Vietnam’s real estate market has just gone through a difficult period, but currently there are many innovative points that motivate recovery in the near future. New apartments are being offered, and developers are coming back to construction.
The market has overcome the difficult period and is officially entering a new cycle, and this is just the beginning of positive prospects.
Currently, real estate prices on the secondary market have decreased significantly by 20, 30, and even 40 per cent, while secondary housing prices will continue to rebalance. House prices are forecast to increase again in mid-2024 and this is the best time to buy real estate for the past 6-7 years.
In particular, the real estate market moves in cycles and the market is currently witnessing an upward cycle. Some investors have applied new sales policies that are more suitable to affordability, such as freezing interest rates for a certain period of time to limit interest rate risks for buyers. All of those efforts are shifting investors back to the market.
The government has introduced policies to stabilise the market and real estate developers have rebalanced their investment portfolios, offering more flexible sales and payment policies for buyers.
The foundation of the market is sustainable long-term demand and the perfect balance between Vietnam's demographics, urbanisation and housing affordability.
