Ailing realty market sees no signs of recovery: analysts

There were yet any slight signs of recovery in the Vietnamese real estate market, according to Batdongsan.com.vn, a local realty platform under Southeast Asia’s leading proptech PropertyGuru.

Nguyen Quoc Anh, deputy CEO at the platform, said the market is facing problems similar to the crisis in 2013. Authorities helped the market at that time by issuing the amended Law on Land and a stimulation package of VND30 trillion ($1.27 billion) with low interest rates of 5-6% for social housing. He suggested the market now needs similar supporting policies to rebound.

Analyzing the numbers of posts related to property trade in January, Batdongsan.com.vn noted that sale news of apartments, private houses, street houses, villas, land lots, and project land fell between 46% and 76% in the month. Meanwhile, searches for private houses, street houses, land lots, and project land decreased by 27-66%, indicating a continued reduction in demand.

According to the General Statistics Office, in January, 338 realty firms registered to open, down 65% year-on-year, while 153 others were dissolved, up 17.7%.

While posts of property trade slumped in the first month of this year, searches for lease units jumped by 101%% last month, reflecting a strong recovery in the leasing market.

Dinh Minh Tuan, CEO of Batdongsan.com.vn for the southern region, attributed the development to customers seeking for-lease residences as they could not afford to buy houses. Besides, when the market is in a crisis due to higher and higher prices, the for-lease market will take the spotlight, he added.

Vietnam's real estate market could recover in late 2023 after turbulence in 2022, said Le Bao Long, director of strategy at Batdongsan.com.vn. Analyzing the real estate market cycle in 2008-2013, the negative year 2022, as well as the delayed impacts of aid policies, credit control, interest rates, and others, the earliest expected point of market reversal is the end of 2023, Long noted.

However, there are uncertainties like changes to the legal framework, including the laws on land, housing, realty businesses, and Fed interest hikes, among others, he added.

Chairing a national conference on Friday, Prime Minister Pham Minh Chinh Chinh said realty firms must be responsible for themselves, solve their problems due to their own mistakes like false market predictions and inefficient investments, and restructure their portfolios with more affordable products, towards suitable profits.

“Doing business has ups and downs, permanent profits are impossible, and stakeholders and parties must join hands during tough times,” the PM said.

He added authorities would solve problems in legal procedures and house planning. Meanwhile, banks must reduce interest rates and fees to support the market.

According to the Ministry of Construction, the number of real estate companies filing for bankruptcy last year increased by 40% year-on-year.

Ho Chi Minh City Real Estate Association chairman Le Hoang Chau said the two biggest challenges in the sector are legal problems and the lack of credit access. He estimated administrative procedural issues account for 70% of the woes property developers face.