HANOI: The domestic real estate market is believed to have reached its bottom and is expected to roar back to life this year, thanks to a slew of measures taken by the government, ministries, agencies and localities.
Speaking at a conference on Scenarios for the Vietnam Real Estate Market in 2024 in Hanoi last Friday, Vietnam Association of Realtors (VARS) chairman Nguyen Van Dinh said 2023 was a difficult year for the real estate market.
He said the market endured a supply shortage as the total supply for the whole year only reached 55,329 products.
Although the figure was a 14% year-on-year increase, it equalled only 32% compared to 2018, before the Covid-19 pandemic.
Few new projects were approved, while thousands of unfinished projects were put on hold due to legal problems. Many other projects were stalled due to a lack of capital, which was the main cause of the problem, Dinh said.
VARS statistics showed that currently only 46 projects had been completed with 20,210 apartments, reaching 4.7% of the set plan for the period 2021 to 2025.
Dinh added that investment demand was clearly affected when customers and investors gradually lost confidence in the real estate market.
Although there were signs of improvement following the market’s recovery, it had not yet regained its previous performance.
In particular, the supply-demand imbalance was becoming more serious, along with the trend of tightening spending, causing demand to decline.
According to the VARS research team, the transaction volume still depended heavily on the quantity of supply. Total transactions in the four quarters of 2023 were: 2,700, 3,700, 5,778 and 5,710 products.
Total transactions for 2023 was equivalent to those of 2022, but only 17% compared to 2018.
The improvement in absorption rate was thanks to key factors: customers and investors were less pessimistic, investors were more active in price reductions and applying a series of preferential policies.
In addition, some projects were eligible to reopen, increasing the choices for customers.
Housing prices were still relatively high compared to both the real value and financial capacity of people, especially in two big cities, with the average apartment price in Hanoi of 51.7 million dong per square metre and 71 million dong in Ho Chi Minh City.
For the land segment, high-value villas or townhouses, investors accepted a loss of 30% to 40% compared to the peak.
However, this condition has and stabilised over time. In localities with clear signs of recovery, selling prices have plateaued, and in some places, have even increased slightly by 3% to 5%.
Hoang Hai, the director of the Department of Housing and Real Estate Market Management under the Construction Ministry, said: “Since the beginning of 2023, the government has taken decisive action and relevant ministries have promptly participated in resolving ‘bottlenecks’ in land procedures, credit and bonds.”
Alongside the prompt issuance of policies, significant progress has also been made in the legal framework with the adoption of two important laws that greatly impact the market: the amended Housing Law and the amended Real Estate Business Law.
The government’s working group ha reviewed, encouraged and promptly addressed the challenges faced by numerous real estate projects in various localities.
However, implementation at the local level remained limited despite some changes, Hai added.
Prime Minister Pham Minh Chinh issued various documents and had several conferences organised to get opinions from businesses, people and experts on ways to remove the stumbling blocks for the market.
The government has identified solutions, one of which is that real estate firms should prioritise paying debts and consider restructuring prices and products based on real demand, said HCM City Real Estate Association chairman Le Hoang Chau.
Another was a decree that removed sticking points in the individual and corporate bond markets, he added.
At the same time, the central bank has focused on enhancing the legal framework, streamlining procedures and increasing preferential credit packages to make it easier for people and enterprises to access bank loans, according to SBV standing deputy governor Dao Minh Tu.
Dinh expects 2024 to mark the final stage of overcoming obstacles in the Vietnamese real estate market.
The market will gradually achieve stability, potentially leading to a more positive outlook, he said.
This change represents a shift towards the starting line rather than actual development, as the market moves away from its negative state.
The progress serves as a solid foundation for the market to prepare for a new cycle of development that is characterised by stability, sustainability and effectiveness, Dinh added.
Along with the solutions to remove all the legal difficulties and capital sources for the real estate market, the “trust” of customers and investors will continue to be a cause of concern and focus to relieve the problem in 2024 must not be relaxed, he said. — Viet Nam News/ANN
