The real estate market is bottoming out.

Real estate market faces many challenges due to lack of liquidity

Since 2022, due to the impact of tight monetary policy and macroeconomic factors, the real estate market has fallen into a "frozen" state. Transactions have decreased sharply, causing land prices to drop by 30-40% compared to 2021.

In 2023, real demand will be the driving force to help the real estate market quickly clear liquidity. In the past 2 years, thousands of projects implemented and invested by businesses across the country have had to stop to review their legal suitability. This is one of the reasons for the decrease in supply and the worsening of the sluggish real estate market.

Removing institutional issues and barriers to capital access contributes to making the real estate market vibrant again.

Currently, the market is experiencing a story where investors are struggling to find ways to cut losses to sell their goods to reduce debt pressure, while some investors with cash are waiting for prices to drop further before buying to optimize profits. The psychology of waiting to "catch the bottom" and "hunt for good prices" makes successful transactions quite modest. This reality makes the real estate market illiquid.

Market research units have commented that real estate market prices have almost reached their lowest level in recent years as demand has decreased sharply, with transactions down 50% compared to the same period. Signs show that the real estate market has bottomed out and there are signs of recovery as interest rates have cooled down earlier than expected. However, they are still at high levels.

Economist Vu Dinh Anh said that the real estate market will have more positive changes when interest rates cool down. However, the current interest rate for home loans has decreased but is still at a high level of 13.5%/year, so investors do not dare to borrow to buy houses. If banks consider further lowering interest rates, the liquidity situation will be good.
“In the first four months of the year, many solutions to support the real estate market have been discussed and issued. Although these measures may take time to have clearer effects, they have partly reflected the Government's strong determination to solve the bottlenecks for the real estate industry,” Mr. Anh emphasized.

Legal solutions for the real estate market

Faced with the inherent difficulties of the real estate market, Deputy Prime Minister Tran Hong Ha recently signed and issued Official Dispatch 469 on removing obstacles and promoting the safe, healthy and sustainable development of the real estate market; requiring ministries, branches and localities to consider this an urgent and important task that needs to be focused on solving according to the principle: Any problem under the authority of a certain level must be solved by that level. Previously, the Prime Minister signed three consecutive Official Dispatches to handle urgent issues for the real estate market and housing development. In March and April, the Government issued important directives such as Resolution 33, Official Dispatch No. 178, Decree No. 10 to promote and remove obstacles for the real estate market.

Ms. Lam Thuy - Chairman of the Board of Directors of MB Land assessed that the Government is accompanying businesses in difficult times. One is to remove institutional issues, the other is to remove barriers to capital access for the real estate market. The Government has taken drastic action. On April 3, the Government issued Decree 43, which recognizes ownership rights for buyers of resort real estate. This has reduced congestion and reassured investors in this field.

Enterprises must continue to select projects for investment with focus and key points, so that products can be liquidated soon, avoid the situation of spreading out projects, and even have to restructure to concentrate resources from projects that have no prospects to projects that will soon have products on the market.

According to the report of the Ministry of Construction, recently, many real estate project investors have proactively reduced prices combined with many gift programs to stimulate purchasing power and create liquidity for the market. However, the general sentiment in the market is still to continue to listen and wait.

Mr. Nguyen Manh Ha - Chairman of the Vietnam Real Estate Brokers Association said that the gradual decrease in interest rates is the bridge to help the real estate market recover and stabilize, and by the end of the year it will probably improve better than at present. According to the Real Estate Brokers Association's observations, although the transaction volume is not too busy, in the first 4 months of this year, the selling price of apartments in Hanoi still increased by 2 - 4% in the affordable and mid-range segments, while high-end apartments only decreased slightly by 1%.

After going through a screening process, in order for the market to become vibrant again, in addition to support solutions from the Government, real estate developers need to restructure their products, focus on segments serving real housing needs, maintain reputation and commitment to build trust with investors and buyers.

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