Housing market expected to rally in 2024: expert

What do you think about the housing market conditions in 2022?

The market faced many difficulties and challenges during the second half due to a credit crunch and very low liquidity. The government’s tightening of credit supply and supervision over private corporate bond placements, has had consequences.

Gaps between supply and demand went on because many developers focused on high-end and mid-level products amid an absence affordable and social housing.

How did real estate companies manage to adapt?

They did manage in different ways, including optimizing operating costs and streamlining personnel structure.

From mid-October, leading firms in Ho Chi Minh City cut their staff, with popular reduction ratios 50-70% of the total. Salary cuts went to those who were allowed to stay while they had to be responsible for more jobs and duties. I reckon that similar cuts may continue now as market woes linger.

Developers facing the burden of paying for bonds had to make different arrangements and efforts to cope with the debts, including negotiating with bondholders on rescheduling payment plans and paying with their housing products, not money.

There were also other ways, like improving corporate management and sales to cut costs, diversifying capital mobilization channels, calling for investments from foreign sources, offering flexible discounts for fast payments to improve cash flow, and focusing on strategic projects instead of developing many projects simultaneously as before.

What is your prediction on market changes in 2023?

It is rather hard to make predictions due to headwinds at home and abroad while the real estate industry remains unstable. It is likely that the market will continue to face difficulties, with medium-low liquidity and few short-term rallies.

The market in 2023 will continue to see corporate restructuring and more enterprises saying goodbye, including both developers and trading floors.

In terms of supply, products that meet real demand will take center stage. They comprise affordable housing and inexpensive land plots. This segment includes apartments priced under VND50 million ($2,130) per square meter in Ho Chi Minh City and under VND35 million ($1,492) in neighboring provinces. The year 2023 will be difficult for the hospitality real estate segment.

Are there signals that the market would improve?

Global headwinds are still there like rising inflation, geopolitical tensions, the U.S. Federal Reserve’s interest rate hikes, forex fluctuations, and fewer import orders. In Vietnam, market woes continue.

However, developers will continue to develop their projects throughout 2023 though the burden of paying for issued bonds will drag on. Meanwhile, legal bottlenecks in licensing projects still exist.

But there are signals promising something better. One of them is the government’s post-pandemic economic recovery package equal to more than $15.4 billion, which is still in use. In late 2022, the State Bank of Vietnam increased its 2022 credit cap for banks by 1.5-2 percentage points, meaning a little more credit.

State regulators have been seeking to purify the market, thereby attracting more investors. Regulators have also been meeting with developers to discuss solutions to make the market healthier and better, easing woes.

It is likely that the market will experience certain rallies in early 2024 when market conditions improve, the corporate bond burden gets a little lighter, and the legal process is more convenient thanks to the revised Land Law and Housing Law, which would have taken effect by then.