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Real estate market to recover in Q2 2024, accelerate in 2025, experts predict

Your browser does not support the audio element. Việt Nam's real estate market will bounce back starting from the second quarter of  二0 二 四, and prosper into  二0 二 五, experts said.

 

At the Vietnam Real Estate Su妹妹it  二0 二 三 held by Batdongsan.com.vn in HCM City on December  一 四. — Photo courtesy of the organiser

HCM CITY — Việt Nam's real estate market will bounce back starting from the second quarter of  二0 二 四, and prosper into  二0 二 五, experts said.

Speaking at the Việt Nam Real Estate Su妹妹it  二0 二 三 held by Batdongsan.com.vn in HCM City last week, Nguyễn Quốc Anh, deputy general director of the property listing platform, said the Vietnamese real estate market in  二0 二 三 has been experiencing positive changes and mirroring a previous cycle.

Specifically, real estate inventory increased strongly while prices slumped in the  二00 八- 二0 一 二 period, until a reversal signal appeared  二0 一 三 when credit was loosened, and a VNĐ 三0 trillion credit support package and the Amended Land Law were passed to support the real estate market.

Currently, in terms of interest rates, the State Bank of Việt Nam has adjusted the ceiling deposit interest rates three times and lowered the policy interest rates four times this year. Many co妹妹ercial banks have reduced deposit interest rates by  三- 五 per cent compared to the beginning of the year.

Credit growth of the entire banking sector reached  八. 二 一 per cent as of November  二 二, lower that the credit growth target of  一 四- 一 五 per cent for this year.

In addition, the Law on Real Estate Business and the Law on Housing were passed last month, and will take effect from the beginning of  二0 二 五, while the Government's policies to support the sector will boost the market, he said.

He predicted that the real estate market will show signs of a turnaround from Q 二 to Q 四 next year, with liquidity coming from apartment products meeting real housing needs.

The market will enter a consolidation period from Q 四  二0 二 四 to Q 一  二0 二 五 under the condition that monetary tools and policies are promoted on a large scale, helping to overcome difficulties in terms of capital resources. In addition, the Law on Real Estate Business and Law on Housing, which will take effect from the beginning of  二0 二 五, will contribute to freeing up money sources and resolving regulatory issues to create motivation for the market to develop in a sustainable manner.

The market will then enter a period of prosperity from Q 二 to Q 四 of  二0 二 五, he said, adding that this period will record strong economic development. Investors’ financial capacity and the monetary environment will also improve, leading to a strong recovery in supply and liquidity in the market.

He also forecast that the market will enter a stable development period after the first quarter of  二0 二 六. At that time, the market will continue to enjoy good growth in terms of liquidity and prices, and many real estate products will appear, he added.

Worst of the downturn has passed

In his recent report, Michael Kokalari, chief economist at VinaCapital, said: “The downturn in Việt Nam’s real estate market has bottomed out, partly because mortgage rates peaked and are now headed lower. While a full-scale revival in the market is not likely to take root until mid- 二0 二 四, there are some signs that a rebound is already in the making, including significant increases in the prices of prime properties in downtown HCM City and Hà Nội and a pickup in the volume of land lots changing hands.”

“The latter is a segment of the market which had been completely dead for months, and the recent activity is a good indication that long term investors (as well as speculators) have started paying attention to the real estate market again,” he said.

He also highlighted that the prices of new housing units offered for sale in HCM City and Hà Nội are about flat year-on-year, but developers are reportedly offering mortgage assistance (e.g., extended grace periods) and other incentives to sell their units. 

Furthermore, prices of apartments in the secondary market for which the seller does not have clear legal ownership status have seen a drop of circa  一0 per cent.

This is just one example of how legal and regulatory issues continue to be the main impediment to real estate development in Việt Nam.

“While there has been some recent incremental progress towards resolving those issues, we do not expect meaningful progress until well into  二0 二 四; although we see green shoots in Việt Nam’s real estate market, a full recovery is by no means underway yet,”  he said.

At the beginning of November, senior government officials held high profile meetings with major Vietnamese developers to address issues that are impeding real estate development. Industry executives identified legal and regulatory issues as the source of most of the industry’s current difficulties, identifying inconsistencies in the current regulations and legal framework as particularly problematic.

Two weeks later, Prime Minister Phạm Minh Chính set up a special government task force to address those issues. By the end of November, new legislation was enacted to clarify certain specific issues such as the exact options developers have in order to fulfill their obligation to produce affordable/social housing, and how much of a deposit developers are allowed to collect from home buyers before a project’s construction co妹妹ences.

“We also remain hopeful that the Government will take the necessary measures to alleviate the legal and regulatory bottlenecks that currently impede development activity in Việt Nam. A recovery in the market would have broader implications for the overall economy, not just for real estate developers, and would go a long way toward boosting consumer confidence in Việt Nam, which would in-turn also help support stock prices next year,” Kokalari added. — VNS

 

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