Vietnam’s real estate market continues to face destabilizing factors and recession risks, with scant supply across various segments, the Ministry of Construction has reported to the parliament.
The report, submitted to the National Assembly’s Economic Committee, highlights a huge supply and demand mismatch particularly characterized by serious shortages of social and affordable housing. Meanwhile, price spikes have made homes unreachable to people with real demand. Condo prices in Hanoi and Ho Chi Minh City have continued going up despite the apparent stagnation.
The number of finished projects in the second quarter of this year was half that of the first and 71% lower year-on-year, the report says, adding that a large number of projects stalled due to legal and capital hurdles.
The number of transactions has also been thin, with Q2 transactions of apartments and individual landed properties falling 57% from a year earlier. The number of land plots changing hands in the second quarter fell 68% year-on-year to 67,525.
In the hospitality segment, prices decreased in the second quarter, but at a slower pace than previous quarters.
Even before the report’s submission, the National Assembly’s Economic Committee had pointed out that housing prices were out of reach for most buyers and that there was a shortage of affordable housing. The majority of real estate products were of mid- and high-end segments and the quantity of low-end homes has dropped four-fold in the past three years, the committee had noted.
To revive the real estate market, the construction ministry’s report proposes a series of solutions with a focus on stimulating the low-income segment.
It mentions that the government scheme of developing at least one million affordable apartments by 2030 is being implemented across the country. Around 20 social housing projects have been kicked off with a combined 37,800 apartments in the pipeline.
The report says 21 social housing projects are entitled to get funding from the VND120 trillion ($4.9 billion) soft loan package. These are due to provide nearly 20,000 apartments.
A number of experts and analysts have concluded that Vietnam’s real estate market is bottoming out and warming up, offering new investment opportunities. Some others argued that the real estate doldrums may extend to the second half of next year.