Vietnam’s property businesses are facing huge difficulties due to capital congestion and large inventories, and some could need up to 149 years to sell all their Q1/2023 inventories, according to the Prime Minister's board for private economic development research (Board IV).
Board IV, one of the boards under the Prime Minister's Advisory Council for Administrative Procedure Reform, made the statement in its the preliminary analysis of financial statements of listed companies.
To deal with this situation, Board IV recommended that policies focus on supporting cash flow for enterprises through credit access and cost reductions and payment postponements. “This will help businesses generate short-term cash flow to at least the second half of 2023, or the first half of next year,” it said.
The board stated that loan interest rates must be brought down to support businesses. Lending interest rates have decreased but are still high compared to other countries. Banks need to look at a business's ability to repay debt in the future to increase their chances to access credit, not just looking at collateral, it added.
Notably, banks can consider allowing developers of real estate serving real needs to reschedule debt but leave their debt groups unchanged, according to the board.
In a recent report sent to legislators, the National Assembly’s appraisal agency said the real estate market is still struggling due to legal issues, limited land funds, and congested cash flow despite many solutions taken by the government and Prime Minister.
As a result, real estate businesses have had to stop implementing projects, leading to difficulties for contractors, material suppliers and many other industries.
"Land-related legal problems such as how to determine land prices and land use fees, site clearance or investor selection regulations overlapping with investment, bidding and land regulations are great barriers to the recovery and development of the housing market," the appraisal agency noted.
In addition, housing prices are very high compared to people's incomes, it added.
In the first nine months of this year, the number of new transactions was only about 50% compared to the same period in 2022 and about 20% of the figure during the period of overheated development due to a lack of social and affordable housing, according to the report.
Vo Hong Thang, R&D deputy director of DKRA Vietnam, predicted the property market would recover at the end of 2023 and early 2024. However, it will be not a "V-shaped" recovery model as expected, but feature solid upward steps, creating momentum for sustainable development in the future.
From now until the first half of 2024 can be considered the beginning of the next growth cycle of the real estate market. When government efforts to remove obstacles prove effective, the public investment disbursement rate will increase, while loan and deposit interest rates are on a downward trend, so the market will see bright spots such as rising new supply focusing on affordable housing and social housing, he added.
The Vietnamese real estate market began to record more bright spots in the third quarter of 2023, with transactions improving month-on-month and quarter-on-quarter, according to the Vietnam Association of Realtors (VARS). The number of transactions across the market has gradually increased. In Q2, the market recorded 3,700 transactions, an increase of 37% from Q1. In Q3, the figure hit nearly 6,000, 1.5 times more than Q2 and over two times higher than Q1.