Signs of real estate recovery and "leverage" to promote growth

Recovery Signal

According to Kinh te & Do thi , in the first and second quarters of 2023, in the context of the volatile world economic situation, the Vietnamese real estate market is still in the "eye of the storm" of crisis. According to statistics from the Ministry of Construction, in the second quarter alone, the number of dissolved real estate enterprises increased by about 30.4% over the same period last year, and newly established enterprises decreased by about 61.4%.

Faced with the above situation, many real estate enterprises continue to be forced to delay or temporarily suspend project implementation, cut and readjust the scale of human resources, some enterprises are forced to reduce over 60% of their workforce to overcome the current difficult period. In the past 10 years, the real estate market has never been in such a "red alert" situation.

The real estate market in many regions and localities is recovering strongly in all segments.

“Real estate enterprises continue to face many difficulties: Legal issues such as regulations on land valuation methods and land use planning; Coordination mechanisms between departments, branches, and localities are not timely and synchronous; Difficulties in accessing credit loans and most enterprises cannot mobilize bond capital.

Real Estate - Signs of real estate recovery and the — Experts believe that the current difficult period will pass quickly and real estate prices will soon increase again. Illustration photo from the internet

In addition, investor confidence and market liquidity are low, so real estate enterprises lack capital, are under pressure from short-term debt, and have total debt greater than their asset size. In addition, foreign exchange rates, gasoline prices, and construction material prices fluctuate, leading to increased costs, affecting the production and business activities of enterprises," said Hoang Hai, Director of the Department of Housing and Real Estate Market Management (Ministry of Construction).

In that context, the State's policies have begun to bring optimistic signals to the market, specifically: from the second quarter of 2023 to now, the State Bank has adjusted the operating interest rate down 4 times, banks have also simultaneously reduced deposit interest rates from 9 - 10%/year to below 7%.

Along with that, many investors have strongly implemented stimulus policies in the form of "huge" discounts, supporting bank loan rates... Therefore, in the second quarter, the number of product transactions increased by about 30% compared to the first quarter.

Notably, due to the positive impacts of policies, many regions and localities have recorded market recovery. For example, in Hai Phong City, according to Mr. To Hung - Head of Hai Phong Representative Office of Vietnam Real Estate Brokers Association, in the third quarter of 2023, the Hai Phong real estate market recorded more transactions in all segments. At the same time, a large number of brokers, offices, companies, and real estate service trading floors returned to operation.

The “leverages” to promote growth

According to Nhip Song Thi Truong , up to now, the real estate market has had many "levers" such as reduced interest rates for both old and new loans, legal issues of projects are gradually being resolved, selling prices have cooled down... Accordingly, the market has shown many signs of improvement recently. In some areas, real estate has begun to regain liquidity.

Mr. Vu Cuong Quyet, General Director of Dat Xanh Mien Bac, said that the indifference of buyers is understandable. Because when the market goes down, people just want the price to go down.

Meanwhile, the market has only been quiet for a year, and buyers believe that this situation will continue. At that time, real estate prices will still decrease. However, Mr. Quyet affirmed that the current market situation is different from the previous period. The difficulties will pass quickly and real estate prices will soon increase again.

Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn in the South, said that the real demand for real estate still exists and good policies supporting the market have created a relative boost. Therefore, the most difficult time for the real estate market has passed. At the same time, the market is likely to recover by mid-2024.

However, when the market recovers, real estate prices will increase again. Therefore, this is a good opportunity for those with cash flow to "hunt" for themselves real estate in good locations, with good potential for price increase, and high discounts. If you go through this period and enter the recovery period, it will not be easy to hunt for a good house at an affordable price.

Mr. Vo Hong Thang, Director of Consulting & Project Development Services, DKRA Group, said that observing the market from the beginning of the third quarter of 2023, secondary liquidity has shown signs of a slight increase again, with investors starting to "buy the bottom" in projects with attractive discounts, full legal documents, locations near crowded existing residential areas, and convenient transportation connecting to the center.

Therefore, according to Mr. Thang, the market is likely to have positive changes by the end of the fourth quarter of 2023 or at the latest in the first half of 2024 thanks to the following "supports":

Firstly, real estate lending interest rates are decreasing and the trend is likely to continue to decrease in the near future. Although more or less the lending room is still quite difficult to access (in terms of legal requirements of the project, the ability of the business to repay the debt...).

Second, the legal dismantling policies of state management agencies have begun to show good signs.

Third, public investment disbursement increased sharply: Many major key transport infrastructure projects across the country were implemented vigorously (Bien Hoa - Vung Tau expressway, Ring Road 3 in Ho Chi Minh City and southern provinces, Ring Road 4 in Hanoi and northern provinces...).

Fourth, domestic macroeconomic growth is quite stable. Although GDP growth is not strong (in the second quarter of 2023, it increased by 4.14%), it is still at an acceptable level in the current conditions of the world economy facing many challenges, inflation remains below 4%...

Dao Vu (T/h)

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