It is a common view among many real estate experts that challenges will remain for the realty market in 2024.
Weak market recovery
The Ministry of Construction’s 2023 review showed that in the first three quarters of last year, real estate transactions were low, with supply fragile across all segments.
Specifically, 42 commercial housing projects were completed with about 15,966 units, reaching about over 46% of the figure in 2022. Construction of five social housing projects was completed with 850 apartments, while 17 resort and office tourism projects were completed, or 56.67% of the 2022 performance.
Regarding transaction prices, according to reports and surveys conducted by market researchers and local authorities, apartment prices have continuously increased due to the scarcity of apartment supply in recent years. However, the price of low-rise housing and some other classifications decreased by 10-20% depending on their locations.
In terms of total transaction volume, by the end of Q3/2023, there were about 324,378 successful transactions, equivalent to 41.29% of the figure in 2022. The decrease mainly focused on the untouched land segment, meeting only 35.79% of the results in 2022. The number of transactions for apartments and individual houses decreased to 63.07% of 2022 results.
As for real estate inventory, data from 53 out of 63 localities indicated the figure in Q3 was about 18,808 units, including 3,196 apartments; 6,554 individual housing units; and 7,190 plots of land. The biggest portions of the inventory were mainly individual residential properties and land plots.
According to the Vietnam Association of Realtors (VARS), since Q3/2-23, many difficulties and obstacles in the market have been gradually improved. The real estate market has witnessed more positive developments. Project investors have clearly shown their willingness to sell with a series of attractive stimulus policies such as discounts, promotions, and long-term interest rate support. Popular policies include delivering houses early and extending payment times to three years for some projects.
In Q2/2023, the market recorded 3,700 transactions, up from 2,700 in Q1. By Q3, the market had recorded nearly 6,000 transactions.
The real estate market in Q4/2023 continued its recovery trend with clearly improved transaction results compared to the previous quarters due to higher investor confidence, lower interest rates, and more supply in the market. However, real estate experts assessed that the recovery will not spike in the short term because the market has experienced chronic challenges.
The beginning of a new growth era
Vo Hong Thang, director of Consulting Services & Project Development, DKRA Group, said the the first half of 2024 will be the start of the next recovery and growth cycle for the real estate market.
“When operating policy becomes effective, public investment disbursement increases, and loan interest rates and deposit interest rates maintain a downward trend, confidence in the market will become brighter," he said.
This expert believes that in the near future, the new supply will increase, focusing on the affordable housing segment and social housing to serve real housing needs. In addition, the market will become more diverse in prices and products, providing more choices for buyers.
Meanwhile, VARS chairman Nguyen Van Dinh said that the market will not be able to return to the exciting times soon. In 2024, only a few products will be launched on the market as investors have been unable to solve problems related to ongoing projects.
The recently passed Law on Housing and Law on Real Estate Business will have to wait until early 2025 to take effect. This means that new policies are not effective yet to solve problems for a series of ongoing projects. As a result, in 2024, supply will not improve and there won't be many major changes.
Besides, the impacts global crises and recession will affect Vietnam. Therefore, more macroeconomic policies are needed.
At the same time, project investors should ease themselves by restructuring products to increase liquidity and sell goods. They must adjust their strategies, instead of focusing on high-end and luxury products. They will have to focus on the middle- and low-end segments, in order to reach quick consumption.
“The government will continue its focus on removing difficulties, but the speed of product delivery will be slow because of the market’s cautious approach. It is likely that the transaction volume may be better than that in 2023. However, the growth rate will only increase slightly but not dramatically, Dinh analyzed. He added that the affordable housing and social housing sectors will reap impressive results to become the market leaders.
Le Hoang Chau, chairman of Ho Chi Minh City Real Estate Association (HoREA), highlighted that the real estate market has the prospect of recovering and growing again from the second half of 2024. But real estate businesses need to drastically restructure their businesses, their investments, and their portfolios, in order to drive housing demand to reasonable levels.
Chau recommends real estate corporations and businesses reduce selling prices, calm their profit expectations, stop setting “high prices," and provide more discounts and promotional policies and after-sales policies to stimulate consumer demand. This could increase market confidence, cash flow and liquidity for businesses. At the same time, real estate corporations and businesses need to shift their investment to the affordable housing segment to match people's incomes.
Sharing the same opinion, economist Can Van Luc acknowledged that to grasp the real estate trends in the coming time, real estate businesses will have to continue restructuring their operations, products, markets, portfolios and projects.
Businesses must strive to overcome financial pressure, including all debt-related obligations; negotiate to delay debt payment; restructure their finances to ensure timely debt repayment. In necessary cases, businesses will have to sell real estate at lower prices to ensure the cash flow.
Ngo Quang Phuc, CEO of Phu Dong Real Estate JSC, said that from the end of November, the market has witnessed positive signals. Specifically, customers have returned to buying real estate, such as Phu Dong's project being developed in Di An town, Binh Duong province selling about five apartments every week since the end of November.
"Customers have genuine demands for living, while products at over VND2 billion ($82,140) are the most popular choices. While the transaction volume was very low in previous months, this can be seen as a sign that the market is gradually recovering and the opportunity for a complete recovery in the second quarter is likely," Phuc added.