The time of reversal of the real estate market is coming

At the announcement event of the "Real Estate Market Report for the Third Quarter of 2023" organized by Batdongsan.com.vn on the morning of October 4, experts assessed that the real estate market in the third quarter of 2023 was still difficult but also showed positive signs of transaction demand and buyer psychology.

Policies positively impact the real estate market

Reviewing the macroeconomic situation and real estate market in the third quarter of 2023, Mr. Nguyen Quoc Anh - Deputy General Director and Business Director of Batdongsan.com.vn shared that in the past quarter, the macroeconomic situation was relatively stable, business activities and bond issuance improved; many new policies were introduced to support the market such as Circular 06, Notice 297 of the Prime Minister to solve difficulties in credit sources and lending interest rates.

In addition, many key infrastructure projects continue to be accelerated by the Government and urgently implemented, bringing about a lot of positive information in general about market sentiment.

Although the economic situation remains stable, the real estate market in the third quarter of 2023 has not yet improved. Both the number of real estate listings and the level of interest continue to decline compared to the same period.

Accordingly, for land plots, the level of interest nationwide decreased by nearly 10% compared to the previous quarter. Compared to March 2023, land plots in the Northern region recorded a 73% decrease in interest; land plots in the Southern provinces also decreased by 71% and the Central region decreased the most, by more than 75%. The volume of land plot transactions has not improved, mainly due to concerns about legality and inappropriate selling prices.

Real Estate - The time of reversal of the real estate market is coming — Mr. Nguyen Quoc Anh - Deputy General Director and Sales Director of Batdongsan.com.vn.

For low-rise housing, the sharp decline in both demand and purchasing power is more common, especially in large cities such as Hanoi and Ho Chi Minh City. Accordingly, in the third quarter of 2023, searches for townhouses nationwide decreased by 52%, villas decreased by 48% and private houses decreased by 42% compared to the same period in 2022.

Searches for townhouses in Hanoi fell by more than 40%, and in Ho Chi Minh City by nearly 60%. Even commercial townhouses in key tourist markets also declined sharply in the last quarter and recovery is not yet evident.

Apartments are the only type of real estate that is less affected because they serve real housing needs. While other types have decreased, the number of searches for apartments nationwide increased slightly by 3%, and the number of searches for rentals also increased by 6%. The demand for apartments in Hanoi increased by 6%, and in Ho Chi Minh City, it increased slightly by 1%.

The rate of successful apartment transactions shows signs of improvement, this is also a type of property that is expected to recover well. Apartment prices do not tend to decrease but only remain stable, even increase slightly in some products and areas. Compared to the first quarter of 2023, the selling price of apartments in Hanoi in the third quarter of 2023 increased by an average of 4-5%, while apartments in Ho Chi Minh City have remained stable in the past time.

How long will it take for each type of real estate to recover?

Sharing about the recovery time of the real estate market, experts have a common opinion that 2024 will be the time when the market reverses. However, the reversal time for each type of real estate will be different.

Specifically, Mr. Nguyen Quoc Anh said that with the land type, despite a sharp decline, this is still a segment that attracts great attention in the Vietnamese real estate market, accounting for 28% of the purchase choice of customers participating in a survey by Batdongsan.com.vn.

Of which, 46% of investors choose to spend money to buy land, 32% of customers who want to expand their living space also choose to buy land.

In terms of price fluctuations, land prices have been growing continuously since 2018. Accordingly, land prices nationwide in the third quarter of 2023 increased by 38% compared to the same period in 2018, the Southern market had the strongest increase in land prices in the country, nearly 71%, while the Northern provinces recorded an increase of about 51% in the past 6 years.

Assessing the recovery prospects of the land market, according to a survey conducted on 1,000 real estate brokers, 25% of brokers believe that the land market will not recover until the fourth quarter of 2024, about 17% believe that it will recover in the third quarter of 2024 and 22.6% believe that the reversal point will be the second quarter of 2024.

Regarding this issue, Mr. Quoc Anh said that compared to other types, the recovery time of the land market may be slower due to many factors.

In terms of economic growth, it is forecasted that the economy will not recover until 2024. Open credit for real estate investment remains very low, and interest rates are gradually decreasing, but at the current rate of decrease, it is expected to take 3-4 quarters to return to the 2021 interest rate.

In addition, the disbursement rate of public investment is expected to explode in 2025, the land law is also expected to be passed by the end of 2024 and will take some time to come into effect. In addition, market sentiment is still low with real estate segments of the investment and speculative type, which do not serve real housing needs.

Therefore, Mr. Quoc Anh predicts that land will recover more slowly than other types and it may not be until the end of 2024 that this market will reverse.

Real Estate - The time of reversal of the real estate market is approaching (Figure 2). — Source: Batdongsan.com.vn

Regarding low-rise real estate, Mr. Le Bao Long - Strategy Director of Batdongsan.com.vn. said that currently, among low-rise housing types, single-family homes are the products with improved transactions, while townhouses and adjacent villas are still sluggish. Business and retail activities have not been able to recover due to the difficult economic situation and unprosperous tourism.

Therefore, the recovery time of low-rise housing compared to land plots is likely to be better but there is differentiation by region. Specifically, in Hanoi, the suburban urban areas in the North and East are expected to be the two most potential areas. As for Ho Chi Minh City, the East is also the area that is assessed to have the best potential.

The pressure of post-pandemic recovery and economic recession makes it difficult for commercial and service development activities in Vietnam. Rental yields are still gradually recovering to pre-pandemic levels, and connecting infrastructure projects are gradually taking shape, so it is forecasted that the low-rise housing market may recover in the late third quarter and fourth quarter of 2024.

Regarding the apartment type, according to a previous survey, about 27% of brokers believe that apartments will recover in the fourth quarter of 2023; 42% believe that this type will recover in the first 6 months of 2024.

In general, this is the type that is predicted to lead the recovery trend of real estate. Mr. Dinh Minh Tuan - Director of Batdongsan.com.vn in the South, said that the apartment market is likely to recover the earliest compared to other types, expected to fall in the first quarter of 2024 and at the latest in the second quarter of 2024 will reverse .

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