Will real estate in 2023 be "easier to breathe"?

Real estate experts and market research units predict that 2023 will open up opportunities for small and medium-sized enterprises (SMEs) with land funds and healthy finances to rise up after some "giants" had to undergo a strong restructuring and purification.

Opportunities for small and medium enterprises

The 2023 real estate market forecast report recently published by Dat Xanh Services Economic - Financial - Real Estate Research Institute (FERI) has presented 3 scenarios for the 2023 real estate market: positive, expected and challenging.

On the positive side, FERI forecasts that Vietnam's GDP in 2023 will reach about 5.5% - 6.5%, inflation will be 5% - 5.5%, interest rates will be 10% - 11%, absorption rate in the real estate market will be average and selling prices will be stable.

In the expected scenario, GDP reaches about 4.5% - 5.5%, inflation is 6% - 7%, interest rates are 14-16%, market absorption rate may fall below the average level and selling prices may be slightly adjusted. In the challenging scenario, when GDP reaches about 3.5% - 4.5%, inflation is about 10%, interest rates are 18% - 20%, absorption rate will be very low and selling prices will be adjusted down more strongly.

After a strong purification process, the Vietnamese real estate market is attracting the attention of domestic and foreign investors.

According to Dr. Pham Anh Khoi, Director of FERI, the real estate market in 2023, regardless of the scenario, will still be more positive than the previous period. The current macroeconomic situation is more optimistic than before with inflation and economic growth much better than the previous period. Policies related to the Land Law, Housing Law, etc. are gradually being completed. Previously, the real estate supply was in excess, but now the supply is scarce, especially serving real estate needs.

In addition, policies are being continued to be implemented such as Resolution 43 (VND 350,000 billion package) and Resolution 11 on the 2022-2023 Socio-Economic Recovery and Development Program to promote synchronous development of economic sectors; support low-income people to own homes through the real estate market recovery support package.

In particular, learning from previous crises, businesses, investors and customers have prepared their own plans to survive. In the context of large real estate businesses facing difficulties with bonds, some medium and small businesses are still stable, issuing bonds, attracting cash flow and implementing projects despite slow liquidity due to the impact of the general situation. Businesses with healthy finances, good land funds and suitable partners will have many opportunities in 2023 and the coming years.

Dr. Nguyen Hoang, General Secretary of the Vietnam Real Estate Brokers Association, acknowledged that through screening, investors and enterprises with strong financial potential, clean land fund, capacity, reputation and large industry network, and experience in handling crises are the units with enough capacity to seek opportunities in difficult times.

"However, businesses need to be aware of the rule of law; focus on long-term strategies, and deal with possible scenarios. At the same time, diversify their network of partners and investors," Mr. Hoang emphasized.

Many people intend to put money down

From the perspective of customers and small investors, the website Batdongsan.com.vn has just published a report on real estate consumer psychology in early 2023, showing that nearly 70% of survey participants intend to buy real estate in 2023. Consumers are less optimistic about the market but still expect real estate prices to increase.

"Many Vietnamese people are willing to spend 40% - 60% of their total income to pay off a home loan. For those with a household income of less than VND40 million/month, the percentage willing to spend about 40% - 60% of their total income on a home loan is 46%.

This rate increases for those with higher household income, specifically 67% for those with income of 40 - 70 million VND/month, 73% for those with income of 70 - 100 million VND/month and 74% for those with monthly income of over 100 million VND" - the report stated.

In a survey conducted by FERI at the end of the fourth quarter of 2022, most consumers expect that in 2023 they will be able to buy an apartment at a reasonable price, around 2 - 3.5 billion VND with 1-2 bedrooms and a project with transparent legal status. At the same time, priority is given to projects in satellite cities, primary real estate types and can be convenient for renting.

In addition, those who want to buy real estate also expect the State Bank to loosen credit limits, adjust loan interest rates and have more support policies from investors. The important factors that influence their decision to buy real estate are loan interest rates, selling prices and finally the potential for price increases.

From an investment perspective, Savills Vietnam believes that the first 6 months of 2023 will be an important time for them to observe before making a decision. "In the context of the global economic uncertainties easing, we believe that investors should not rush to withdraw from the market.

In Vietnam, the State Bank is doing a very good job of keeping the VND stable compared to other currencies and real estate is a long-term investment. Investors who feel insecure about the risks of 1-2 years should find a more suitable investment channel because if looking at the overall picture, the Vietnamese real estate market is in a very good position" - experts from Savills Vietnam expressed their opinion.

Mr. Tin Nguyen, Head of Market Research, Colliers Vietnam, said that the residential real estate segment continues to face difficulties in terms of legality, liquidity, and capital sources, which are expected to last until at least the third quarter of 2023.

The latest moves by the Government , from the State Bank to the working groups of ministries and sectors, show their determination to restore the market in a sustainable manner. "The postponement of new sales has narrowed the supply, contributing to promoting transactions," commented Mr. Tin Nguyen.

Demand for Class C apartments will continue to increase

Mr. Troy Griffiths, Deputy Managing Director of Savills Vietnam, assessed that after a strong purification process, the Vietnamese real estate market is still attracting the attention of domestic and foreign investors. "In the eyes of investors, Vietnam still has a long way to go with the urbanization process.

The middle class and wealthy population is increasing, while the supply of Class C is lacking as investors pursue products in higher segments. Therefore, the demand for Class C apartments will certainly continue to increase for a long time," Mr. Troy further analyzed.

Source: https://nld.com.vn/kinh-te/bat-dong-san-2023-co-de-tho-hon-20230109213345268.htm