Want to be in the loop?
subscribe to
our notification
Business News
REAL ESTATE MARKET TO RECOVER IN Q2 2024, ACCELERATE IN 2025, EXPERTS PREDICT
Việt Nam's real estate market will bounce back starting from the second quarter of 2024, and prosper into 2025, experts said.
Speaking at the Việt Nam Real Estate Summit 2023 held by Batdongsan.com.vn in HCM City last week, Nguyễn Quốc Anh, deputy general director of the property listing platform, said the Vietnamese real estate market in 2023 has been experiencing positive changes and mirroring a previous cycle.
Specifically, real estate inventory increased strongly while prices slumped in the 2008-2012 period, until a reversal signal appeared 2013 when credit was loosened, and a VNĐ30 trillion credit support package and the Amended Land Law were passed to support the real estate market.
Currently, in terms of interest rates, the State Bank of Việt Nam has adjusted the ceiling deposit interest rates three times and lowered the policy interest rates four times this year. Many commercial banks have reduced deposit interest rates by 3-5 per cent compared to the beginning of the year.
Credit growth of the entire banking sector reached 8.21 per cent as of November 22, lower that the credit growth target of 14-15 per cent for this year.
In addition, the Law on Real Estate Business and the Law on Housing were passed last month, and will take effect from the beginning of 2025, while the Government's policies to support the sector will boost the market, he said.
He predicted that the real estate market will show signs of a turnaround from Q2 to Q4 next year, with liquidity coming from apartment products meeting real housing needs.
The market will enter a consolidation period from Q4 2024 to Q1 2025 under the condition that monetary tools and policies are promoted on a large scale, helping to overcome difficulties in terms of capital resources. In addition, the Law on Real Estate Business and Law on Housing, which will take effect from the beginning of 2025, will contribute to freeing up money sources and resolving regulatory issues to create motivation for the market to develop in a sustainable manner.
The market will then enter a period of prosperity from Q2 to Q4 of 2025, he said, adding that this period will record strong economic development. Investors’ financial capacity and the monetary environment will also improve, leading to a strong recovery in supply and liquidity in the market.
He also forecast that the market will enter a stable development period after the first quarter of 2026. At that time, the market will continue to enjoy good growth in terms of liquidity and prices, and many real estate products will appear, he added.
Worst of the downturn has passed
In his recent report, Michael Kokalari, chief economist at VinaCapital, said: “The downturn in Việt Nam’s real estate market has bottomed out, partly because mortgage rates peaked and are now headed lower. While a 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, including significant increases in the prices of prime properties in downtown HCM City and Hà Nội and a pickup in the volume of land lots changing hands.”
“The latter is a segment of the market which had been completely dead for months, and the recent activity is a good indication that long term investors (as well as speculators) have started paying attention to the real estate market again,” he said.
He also highlighted that the prices of new housing units offered for sale in HCM City and Hà Nội are about flat year-on-year, but developers are reportedly offering mortgage assistance (e.g., extended grace periods) and other incentives to sell their units.
Furthermore, prices of apartments in the secondary market for which the seller does not have clear legal ownership status have seen a drop of circa 10 per cent.
This is just one example of how legal and regulatory issues continue to be the main impediment to real estate development in Việt Nam.
“While there has been some recent incremental progress towards resolving those issues, we do not expect meaningful progress until well into 2024; although we see green shoots in Việt Nam’s real estate market, a full recovery is by no means underway yet,” he said.
At the beginning of November, senior government officials held high profile meetings with major Vietnamese developers to address issues that are impeding real estate development. Industry executives identified legal and regulatory issues as the source of most of the industry’s current difficulties, identifying inconsistencies in the current regulations and legal framework as particularly problematic.
Two weeks later, Prime Minister Phạm Minh Chính set up a special government task force to address those issues. By the end of November, new legislation was enacted to clarify certain specific issues such as the exact options developers have in order to fulfill their obligation to produce affordable/social housing, and how much of a deposit developers are allowed to collect from home buyers before a project’s construction commences.
“We also remain hopeful that the Government will take the necessary measures to alleviate the legal and regulatory bottlenecks that currently impede development activity in Việt Nam. A recovery in the market would have broader implications for the overall economy, not just for real estate developers, and would go a long way toward boosting consumer confidence in Việt Nam, which would in-turn also help support stock prices next year,” Kokalari added.
Source: VNS
Related News
VIETNAM’S GDP TO GROW 5.5% THIS YEAR – WB
This forecast is based on the assumption of a moderate recovery in manufacturing exports in 2024, fueled by rebound growth of 8.5% year-on-year in the fourth quarter of 2023 and 17.2% year-on-year in the first quarter of 2024, reflecting strengthening global demand, said Dorsati Madani, senior country economist at the WB in Vietnam.
FARE REFUND FOR VISA REJECTION
Cathay Pacific will offer full refunds for cases of visa rejection to provide you with the confidence to explore the world with ease. If you are planning to fly to a destination that requires an entry visa, you can now book with greater peace of mind.
FOUR COMMODITIES POST Q1 EXPORT VALUE OF OVER 5 BILLION USD
The total export turnover of agricultural, forestry, and fisheries products in the first three months of 2024 is estimated to reach 13.53 billion USD, an increase of 21.8% compared to the same period of 2023.
MOIT PROPOSES SCHEME TO BOOST RENEWABLE ENERGY PROCUREMENT
The proposed Direct Power Purchase Agreement (DDPA) mechanism, outlined in the draft decree, targets organisations and individuals consuming electricity from the 22kV power grid or higher, with a monthly consumption averaging 500,000kWh. However, residential households are excluded from direct procurement.
REAL ESTATE BONDS PLACE PRESSURE ON ISSUING FIRMS
The ministry’s recent report underscores concerns within Vietnam’s corporate bond market for 2023 and 2024. It emphasizes the critical need to address hindrances to the real estate sector in line with the objectives provided in Government Resolution No. 33/NQ-CP, which aims to stabilize the industry.
DA NANG CUSTOMS FOCUSES ON DEVELOPING CUSTOMS-BUSINESS PARTNERSHIPS
Da Nang Customs Department issued an action plan for developing customs-business partnership in 2024. One of the new events this year is the workshop on “Settlement reports for enterprises engaged in outsourcing, export production and export processing” held in Da Nang Customs Department on April 16, 2024.