On the afternoon of October 12th, the Vietnam Real Estate Association (VNREA) and the Vietnam Association of Real Estate Brokers (VARS) jointly organized an event to announce the report "Assessment of the recovery progress of the Vietnamese real estate market in Q3/2023 and forecast of the market situation in Q4/2023".
Real estate transactions are picking up again.
In her opening remarks, Ms. Pham Thi Mien, Deputy Head of the Market Research and Investment Promotion Consulting Department of VARS Real Estate, cited data from VARS's research indicating that liquidity in the real estate market is gradually improving, especially compared to the difficult period at the end of last year and the first few months of this year.
The market is starting to show more positive signs. These include economically developed localities that are receiving attention and focus on promoting infrastructure and transportation investment, and have a sufficient supply to meet demand, such as Hanoi, Hai Phong, Lao Cai, Da Nang, Ho Chi Minh City, etc.
Ms. Mien believes that the above results are due to the efforts, close cooperation, and coordination between state management agencies and businesses. In particular, nearly 20 related actions and sub-legal documents issued by the Government have been continuously and rapidly implemented, with content increasingly aligned with the actual needs of the market and businesses.
"Although the market is not yet strong enough to 'overcome the steep incline,' it has somewhat avoided the risk of 'losing control'," Ms. Mien stated.
The real estate market has passed its most difficult phase, and transactions are gradually recovering in both quantity and quality.
The report's data shows that the volume of transactions across the market has been steadily increasing over time, with more products meeting consumer needs being introduced. Accordingly, in the third quarter of 2023, the market recorded nearly 6,000 transactions, 1.5 times more than in the second quarter and more than twice as many as in the first quarter of 2023.
However, compared to previous periods, the total number of transactions in the first nine months of 2023 was only about 50% of the same period last year and about 20% of the peak during the real estate boom. This is due to the continued lack of supply in the social housing and affordable housing segments, as house prices continue to rise with no signs of stopping.
Looking ahead, the VARS report clearly indicates that the economic recovery, along with positive forecasts for economic growth, will certainly lead to increased demand for real estate across all segments, from apartments to office rentals, factories, and retail properties. Especially given the current tight supply due to various reasons, an increase in real estate prices in the near future is a likely outcome.
Furthermore, Ms. Mien also mentioned that the State Bank of Vietnam has lowered the policy interest rate four times consecutively since March 2023. Bank lending interest rates have seen a significant downward adjustment, ranging from 6.7% to 10%, approaching the levels of early 2022, and decreasing by 0.4% to 3.5% compared to the end of the second quarter of 2023. This is a favorable interest rate for homebuyers. Buying a house to live in during this period will optimally take advantage of credit and price levels.
More mechanisms are needed for investors to build social housing.
Speaking at the event, Mr. Le Dinh Chung - Member of the VARS Real Estate Market Research Task Force, General Director of SGO Homes, said that the residential real estate market in major cities has shown signs of bottoming out, focusing on the apartment and house segments priced under 10 billion VND in the central core area.
While the land plot segment hasn't shown positive signs yet, there are indications of a bottoming-out period in the auctioned land category, particularly in areas surrounding Hanoi . Prices around 2 billion VND have an absorption rate of 70%-80%, with auction prices approximately 5% higher than the starting price. These plots can be resold immediately with a profit margin of 30-50 million VND per plot.
Only the resort tourism segment remains sluggish, with transaction volumes stagnating due to investor sentiment in the market.
Mr. Le Dinh Chung - General Director of SGO Homes, delivered a speech at the event.
Expressing his views on the supply of social housing, Mr. Nguyen Hoang Nam - Member of the VARS Real Estate Research Task Force, General Director of G-Home JSC - emphasized that the government's policy of building 1 million social housing units is highly humane.
However, in reality, Mr. Nam believes that 1 million social housing units are not enough for the current market, and even if the above plan is fully implemented, people will still have many other needs for housing.
Meanwhile, the process of implementing, constructing, and selling social housing projects still faces many obstacles, ranging from legal mechanisms to regulations and conditions for purchase, as well as cases eligible for policy benefits.
In particular, Mr. Nam pointed out the current situation where people are finding it very difficult to access social housing because many regulations are too strict, categorizing people into rich and poor groups, making social housing out of reach for many segments of the population.
From the investor's perspective, implementing social housing construction is also a challenging problem, facing difficulties from various sources, including mechanisms, policies, and the financial capacity of businesses. According to Mr. Nam, building social housing is "both difficult and risky."
Currently, the market even faces the problem of unsold social housing because the construction areas are located in inconvenient locations and do not meet the living requirements of residents. Many investors put in time and money to build, but are hampered by administrative procedures for decades. After completion and sales begin, if they incur losses, they have to bear them themselves; if they make a profit exceeding 10%, they are forced to return the money to the state – Mr. Nam believes this is unreasonable.
Accordingly, the General Director of G-Home JSC suggested that housing policies should target all social classes. Regulations defining the beneficiaries of social housing policies need to be revised to be more appropriate. Social housing should not be sold only to the wealthy, but should also target those with taxable incomes, savings, but who cannot access commercially available housing which currently has high selling prices.
At the same time, mechanisms and policies for investors should be developed in a more open and flexible manner, and should commend, encourage, and create conditions for businesses building social housing to have more opportunities to continue building.
In conclusion, Mr. Tran Van Binh - Vice Chairman and General Secretary of VARS - believes that in the coming time, along with legal and capital bottlenecks, the confidence of customers and investors is the final "barrier" that needs to be removed for the real estate market to truly return to normal.
The real estate market in the fourth quarter of 2023 is considered a stepping stone for transformation in 2024. The overall market picture will certainly have many new bright spots. This is especially true for areas with significant development potential, comprehensive and modern planning, well-developed infrastructure, and relatively low property prices .
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