Vietnam's ailing real estate market is undergoing a healing process and is expected to start recovering in the third quarter thanks to the government's aid in legal issues.
At a Saturday workshop, Vietnam Association of Real Estate Brokers (VARS) chairman Nguyen Van Dinh said the market is seeing positive signs thanks to regulatory action to remove market woes.
According to Dinh, the government will focus on tackling legal procedural problems for social housing projects in Q2, along with accommodation projects for workers and upgrading old apartment buildings.
The Prime Minister has continued to instruct regulators and relevant state agencies to join hands to deliver a market recovery.
Can Van Luc, chief economist at state-controlled BIDV bank, said the government is looking to remove market difficulties, with top priority given to legal procedures to help recover market confidence.
The next is to solve the corporate bond burden. This year and in 2024, property developers in Vietnam will have to make payments of an estimated VND234 trillion ($9.83 billion). In response, the government is rushing to amend Decree 65 on corporate bonds to unleash this source of capital.
In terms of the current credit crunch, the government’s measures to assist property developers include extending loan terms, rescheduling bank loans, and extending tax and land fee payments.
With the same viewpoint, Tran Dinh Thien, former director of Vietnam Institute of Economics, said the government has mapped out various solutions to support businesses. He said two support packages are underway to fuel social housing and employee accommodation, and a market recovery is expected in Q3.
A VARS report for January showed that trading volume was very low. During the month, brokers continued to struggle, and many small and medium-sized brokers had to sell assets to keep their offices open. To date, tens of thousands of brokerage employees have lost their jobs, about 80% of the total number.
The report also showed that since 2018, policy-related obstacles have not been thoroughly solved, making it challenging for real estate businesses to implement projects and causing supply to dwindle.
In terms of supply, 2018 saw 180,000 new apartments, but the number went down to 50,000 in 2021, then about 48,500 last year, equal to 20% of that in 2018, according to the report.
In terms of segment, affordable housing accounted for almost 19% in 2019, but the ratio was only 4% in 2022.
Nationwide, ongoing real estate projects are worth some VND800 trillion ($33.59 billion), including social housing projects, according to the report.
Le Hoang Chau, chairman of Ho Chi Minh City Real Estate Association, estimated administrative procedural issues account for 70% of the woes property developers are facing.