What "color scheme" will the real estate market adopt in 2024?

Người Đưa Tin•26/02/2024

The market remains challenging in the short term.

According to real estate expert Nguyen Van Duc, the amended Housing Law, the amended Real Estate Business Law, and the amended Land Law, which were passed by the National Assembly , provide a legal framework to help the real estate market develop healthily and sustainably.

However, since these laws will only take effect in early 2025, Mr. Duc is concerned about how many businesses and customers will be able to withstand the pressure and remain stable during that time.

Real Estate - What — Experts believe that the real estate market has not yet recovered.

However, from the perspective of the Vietnam Association of Real Estate Brokers (VARS), the real estate market will recover strongly. For a long time, a series of projects have been "stalled" waiting for the resolution of legal obstacles (70% of the obstacles faced by real estate businesses).

Therefore, the 2024 Land Law is expected to remove legal bottlenecks, helping many projects to "revive" and quickly bring the market back to life. The new provisions in the 2024 Land Law have a significant impact on many entities participating in the real estate market.

Real estate expert Nguyen Van Duc believes that the overall picture of the real estate market has not yet shown signs of improvement, and the difficulties remain in the short term.

Regarding the townhouse and villa segment, this expert predicts continued stagnation and low liquidity. Townhouse and villa projects in the inner city will be difficult to sell due to the impact of "house classification" and "house tax".

In recent years, real estate businesses have largely focused on investing in high-end products, with villas and shophouses being quite expensive and experiencing rapid price increases in a short period. They create products targeting the wealthy while neglecting affordable products that cater to the majority of the population, especially those with low incomes. When projects are launched en masse with the sole purpose of profit without benefiting the community or society, it means their business strategy has gone awry.

"Tens of thousands of condotels, shophouses, and resort villas are frozen. As a result, businesses, customers, and banks will suffer heavy losses. This is the biggest disaster for the real estate market at the present time."

In the context of many businesses being unable to sell goods, unable to rotate capital, and lacking the financial resources for restructuring; accounts being frozen while the burden of paying interest and maturing bank loans and bonds weighs heavily on businesses. In addition, many projects are stalled, some even facing legal issues, thus businesses are in a state of anxiety, and those lacking sufficient economic resources may even… “die,” Mr. Duc offered his perspective.

Apartment prices continue to rise.

In the apartment segment, expert Nguyen Van Duc assesses that this is the segment with the best absorption rate in the market today; however, the supply in this segment has not improved due to the scarcity of projects granted construction permits and very few apartment buildings being implemented in the inner city.

Project scarcity and insufficient supply to meet demand have led to a continued increase in average primary market selling prices. This segment will continue its price growth trend due to rising land and construction costs, developing infrastructure, and improved quality.

According to the latest statistics from Savills, in Hanoi , at the end of 2023, apartment prices ranged from 51 to 70 million VND/m2, with 49% of apartments sold within this price range. Accordingly, the apartment segment has established a new price threshold. Apartments priced above 4 billion VND accounted for 42% of units sold in 2023. Apartments priced between 2 and 4 billion VND accounted for 55% of the market share. Only 3% of apartments were priced below 2 billion VND.

Similarly, in Ho Chi Minh City, apartment prices continue to rise, especially in projects in the central area. In fact, the market has seen a significant absence of affordable apartment projects priced below 25 million VND/m2, with the majority being mid-range and high-end apartments that meet the requirements for capital mobilization and transactions.

According to a report from the Ho Chi Minh City Department of Construction, in 2023, the city had 19 commercial housing projects (with 17,753 units) that met the criteria for selling or leasing future housing products to the market. Notably, the mid-range segment accounted for 5,051 units, the high-end segment for 11,334 units, and there were no projects in the affordable housing segment.

Regarding the social housing segment, Mr. Nguyen Van Duc observed a positive trend, showing some "bright spots" compared to 2023. However, this segment does not attract many investors due to difficult procedures and unfavorable conditions for businesses. "The new regulations in the amended Housing Law are more open, making it easier for the poor to access social housing."

However, for the law to be effectively implemented, it takes time for it to "absorb." The target of 1 million social housing units will be difficult to achieve according to the plan if the government lacks a strategic vision, practical and scientific methods instead of just relying on businesses. We set a target of completing 1 million social housing units by 2030, but in reality, both capital and mechanisms are still lacking," Mr. Nguyen Van Duc stated.

Mr. Tran Van Binh, General Secretary of VARS, believes that legal issues are a top priority for businesses because they are key factors determining the formation and development of real estate projects. Accordingly, removing obstacles related to land policies will create momentum to help the real estate market recover. This is most evident in land use planning and increased transparency, as well as increased public participation in land use planning. Furthermore, auction and bidding processes will create a fair competitive environment for real estate businesses.

Ngan Giang

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