Vietnam property market past most difficult period: expert

The Vietnamese real estate market has gone through its most difficult period, and businesses or investors that have survived have done so through strong experience and resources, said Nguyen Van Dinh, chairman of the Vietnam Association of Realtors (VARS).

How do you evaluate Vietnam’s real estate market in the first quarter of 2024?

The real estate market went through a crisis in 2023, with a sharp decrease in both supply and liquidity, and many segments becoming frozen. However, there have been signs of a recovery since the end of 2023 when multiple projects reopened for sale and saw high absorption rates. In addition, the government’s macroeconomic policies and legal framework have also supported the development of the market.

This period is called a market purification period when many weak businesses have to leave the market. Meanwhile, those still surviving are really capable. These difficulties have forced them to adjust and restructure, standing ready to return to the market.

For investors, the survivors are those with understanding, experience and a willingness to re-join the market with a new mindset.

In the first quarter of 2024, the market saw new supply increase by about 8% compared to the end of 2023, mainly coming from new baskets of old projects. New project launches were also vibrant nationwide. In addition, transactions rose by about 10%. This indicates that supply is still insufficient due to institutional obstacles.

With low supply and lack of options, inflation has appeared in some places. This is an anomaly and will certainly be corrected in the near future. When supply and demand meet, the market will return to normal levels.

Generally, 2024 will be the last year in the process of overcoming difficulties, and the real estate market will gradually become stable and positive. This will be the foundation for the market to prepare for a new development cycle that is sustainable and effective. Although new laws have yet to be applied, there are positive signs for market players that will improve their confidence for the upcoming period.

In particular, the amended Land Law, the amended Law on Real Estate Business, and the amended Housing Law have created a new ecosystem in the context of a continued macroeconomic recovery and promoted public investment.

I think that this year's real estate market will recover but not boom.

Some opinions compare corporate bonds to a "bomb with a slow-burning fuse" for the real estate market. What do you think about that?

Adjustments in Decree No. 08/2023/ND-CP have helped businesses to issue private placement bonds to mobilize capital to pay due debt obligations to investors and continue production and business activities. In 2023, many businesses negotiated and reached agreements with bondholders on bond debt repayments, with many positive solutions put forth such as debt swaps and extensions to repayment deadlines. These have helped businesses resolve problems and avoid defaulting.

At the same time, many businesses have restructured and come up with plans to re-join the market with more appropriate strategies.

In the first quarter of 2024, there were 18 batches of new bonds issued by 15 businesses, with a value of VND18.75 trillion ($739.8 million), of which 55% came from the real estate group.

In addition to private placement bonds, loan interest rate bottlenecks have been gradually removed, significantly supporting the property market. Falling interest rates will help improve real estate demand and have a positive impact on investors' cash flow.

Besides the positive prospects for the real estate market, what are the biggest problems that need to be resolved in 2024?

Having already amended laws to remove bottlenecks and prevent overlapping and inconsistency, the country should continue to support the removal of problems facing projects. Removing these obstacles will create better momentum for the realty market.

However, if these problems are not resolved quickly, they could prove to be a double-edged sword and have negative impacts on the market. I believe that with the government's determination, many issues have already been discussed and the right solutions have been delivered promptly.

Apartment prices have increased for about 20 consecutive quarters, and many people are concerned that they have climbed "virtually". In your opinion, why have apartment prices risen so sharply?

Apartment prices have skyrocketed because supply in Hanoi has recently become increasingly scarce. The number of new apartment projects is limited, while demand is on the rise. The product structure in the real estate market has become more and more unbalanced, making apartment prices out of reach for the average income of residents.

However, apartment prices have only increased locally in Hanoi, while this situation has not been seen in Ho Chi Minh City. I think taking advantage of supply shortage and increasing demand, some groups have created virtual supply and demand to hike prices.

Therefore, investors and customers need to be careful and calm. Fortunately, the real estate market as a whole has not been caught up in this price cycle. The information we are seeing is all about rising prices, but transactions are almost zero.