Real estate market forecast to flourish from the second half of 2024
Managers, experts and investors predict that the real estate market will improve from the second half of 2024 thanks to factors such as: 03 major Real Estate Laws have been passed; Interest rates have decreased and are expected to remain low, with room for lending interest rates to be reduced; Confidence and liquidity have gradually improved, focusing on the apartment segment; Infrastructure development supports the recovery of the real estate market. Specifically, in terms of capital, lending interest rates are expected to continue to decrease to low levels and preferential lending policies of commercial banks for home buyers can help improve demand and increase market liquidity. In addition, reducing lending interest rates is also expected to reduce financial pressure, thereby recovering the business activities of real estate investors.
Furthermore, legal policies are expected to minimize difficulties. The Government has issued many documents and policies to remove legal difficulties such as Decree 08 on negotiating and extending maturity bonds, Decree 10 supplementing regulations guiding the issuance of Certificates for resort real estate, condotels; project to develop 1 million social housing...
Regarding liquidity, experts and investors also expect better liquidity in 2024 in the mid-range and affordable apartment segment, social housing in the center and provinces on the outskirts of the center because new supply has not improved but demand for real housing has increased; investors start trading again when lending interest rates decrease.
In fact, infrastructure development is expected to support the recovery of the real estate market. Key mega-projects have been simultaneously implemented such as the North-South Expressway phase 2021-2025, Long Thanh International Airport, Ho Chi Minh City Ring Road 3, Hanoi Ring Road 4. This will solve the current infrastructure problems in Vietnam, thereby promoting the development of business sectors. Expressway projects will help increase connectivity between economic regions, attracting more investment capital into Vietnam.
Accelerating the development of infrastructure projects is expected to increase the value of real estate projects located near public investment projects. Agriseco assessed that potential areas to attract investment capital after completing major projects of the North-South Expressway, Long Thanh Airport, etc. include: Ho Chi Minh City, Ba Ria - Vung Tau, Dong Nai, Long An , Hai Phong, Quang Ninh, Hung Yen, Bac Ninh. Investors owning large land funds located near projects that can benefit are VHM, NLG, KDH, DXG, HDC, VPI, NVL, PDR, DIG.
Another expectation is that the apartment segment with real demand in the inner city or on the outskirts of the city center with developed infrastructure will recover early in 2024 thanks to: Real demand of people is still large when supply and absorption rate gradually recover; Interest rates for mortgage loans to buy houses are expected to decrease; Circular 06 amendment allows home buyers to borrow from banks to pay off debts to other banks; Stimulus policies of real estate investors (reducing selling prices, extending payment schedules).
Meanwhile, apartment supply and prices are expected to continue to increase in central and peripheral cities with favorable locations. New apartment supply in Hanoi and Ho Chi Minh City is expected to reach 16,000 units, up 55% year-on-year, and 9,000 units, up 3.4% year-on-year, respectively, in 2024, concentrated in the mid-range and high-end segments. Apartment prices are expected to continue to increase by 3-8% year-on-year due to the high gap between supply and demand.
The supply of social housing is expected to have 108 projects, with a scale of nearly 48,000 apartments in 2024, a figure that is nearly 4 times higher than in 2023, concentrated in Dong Nai, Long An, Bac Ninh, Hai Phong, and Quang Ninh thanks to the Government's continuous implementation of policies to support the increase in the supply of social and affordable housing. The gap between supply and demand is expected to remain in 2024, but in the context of scarce supply, apartment projects with reasonable prices and full legal documents will still attract home buyers.
Land market is still a channel to attract cash flow
Although the real estate market is facing many difficulties, it is the general picture of the whole market. However, in the real estate segments, land is still a channel to attract cash flow and create very high liquidity. Besides, currently, banks have reduced interest rates, industries will gradually recover in 2024, land is also a segment with sustainable, long-term value accumulated over the years, so investors in this segment are increasingly waiting.
According to experts, in all segments, the land market remains stable, attracting investors and the land channel brings long-term value, so it is trusted. According to DKRA's market research report, the land segment in 2023 will welcome 22 projects with a supply of about 1,850 plots, down 73% compared to 2022, the lowest level in the past 5 years. Consumption reached about 751 plots, approximately 41% of the total newly opened supply, down 84% compared to the previous year. Transactions occurred mainly in the product group with prices of 12.9 - 14.9 million VND/m2 and common areas from 70 - 90 m2.
In addition, the National Assembly recently passed the Law on Real Estate Business (amended), effective from the beginning of 2025, regulating the tightening of land subdivision and sale, which also shows that the adjustment of land fever is gradually being implemented. With the number of land subdivision and sale in urban areas booming in recent years, this tightening of land subdivision affects the entire market from North to South and land may no longer witness as many land fevers as before. Specifically, according to Clause 6, Article 31 of the draft Law on Real Estate Business (amended), it will not be allowed to transfer land use rights to individuals in wards, districts, and cities of special, type I, type II, and type III urban areas. The scope of application is expanded compared to current regulations (in special type urban areas and type I urban areas directly under the Central Government).
Commenting on this regulation, most experts pointed out that it will likely contribute to increasing pressure on the new supply of subdivided land to the market in the coming time.
Meanwhile, according to some investors, the revised Real Estate Law will have a major impact on the real estate market, helping to increase transparency in buying and selling, especially in the subdivision and sale of land. Specifically, the law helps to strengthen state management control over subdivision and sale of land; ensure uniformity in architectural aesthetics and urban planning (houses must be built on land before being sold to buyers); ensure rational and effective use to avoid wasting national land resources, etc.
In addition, the recently passed revised Land Law is expected to greatly benefit the real estate market, especially in terms of greater transparency in real estate development stages.
According to the report, the real estate market has recently faced many difficulties due to high interest rates, loss of investor confidence after events related to corporate bonds, legal problems and tightening credit flows into real estate when the State Bank reduced the ratio of short-term capital for medium and long-term loans, or issued Circular 06. However, as analyzed by experts, the above reasons will somewhat cool down in 2024, thereby supporting the recovery trend of the real estate market, although the scenario of overheating again will not happen.
Accepting the market challenge in 2024
However, market researchers also pointed out some challenges for the real estate market in 2024.
First, real estate consumer demand is recovering but still slower than expected. According to data from the State Bank, outstanding credit for real estate consumer activities (personal loans for home purchase) is on a downward trend in both scale and proportion.
Second, the value of maturing bonds remains large. In 2024, the value of maturing corporate bonds is quite large, estimated at about VND330,000 billion. The scale of maturing bonds is about 20% higher than in 2023 and is concentrated in the second half of 2024. The risk of illiquidity in the coming years may increase if businesses continue to postpone or extend debt repayment.
Third, many real estate projects in localities are facing difficulties in implementation. In some large localities, about 70 - 80% of projects have been temporarily suspended.
Fourth, supply has decreased but is accompanied by an unreasonable product structure, a lack of affordable housing for low-income people in urban areas, especially a lack of housing for workers and social housing.
Fifth, businesses have difficulty accessing capital.
Signals of the macro economy, the world economy and Vietnam are showing signs of recovery, and 2024 - 2025 is forecast to be better. Moreover, due to the drastic measures taken by the Government, Ministries, sectors and localities, positive signals from the market have gradually appeared. With the above challenges and difficulties, the market still needs time to completely resolve them./.
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