Vietnam real estate market awaits rebound

Many experts predict that the Vietnamese real estate market will recover around the third quarter of 2024, but some others hold that 2024 will continue to be a difficult year for the market.

According to the Ministry of Construction (MoC), with drastic measures taken by the government, the Prime Minister, the MoC and localities, the property market situation showed positive signs in the second half of 2023, with increasing supply and transactions in the land plot and apartment segments.

Real estate expert Nguyen Hoang said there are three scenarios for the market in 2024. The most expected scenario is that the market will recover from the third quarter of 2024. In the second scenario, the market will still face difficulties as in 2023, and will only recover in 2025. In the third one, the market will be even more difficult than 2023 as this year marks the bottom of the cycle.

"These are all just predictions and can be right or wrong, because the market depends on many factors. However, I am in favor of the first scenario," he said.

However, Hoang said he believed the market will recover slowly. This recovery depends on many factors, with the macro economy being the most important. It can be seen that Vietnam’s macro economy has gradually improved since mid-2023, he noted.

“The government's fiscal policy is more flexible and open but still cautious to avoid long-term consequences,” he stated.

In addition, the market recovery also depends on more drastic policies from the government such as the upcoming adoption of the revised Land Law and the enforcement of the amended laws on Real Estate Business and Housing in 2025, helping to remove obstacles.

Public investment in transportation infrastructure continues to be the driving force for the real estate market in 2024, with disbursement expected to be the same as in 2023, he added.

Difficulties in terms of capital will gradually be solved for both real estate developers (bond maturity) and credit institutions (bad debt risk from real estate), Hoang said.

Moreover, the stock market is forecast to post significant growth in 2024 as the government takes measures to upgrade the market status by 2025. When this market is positive, listed real estate businesses will have opportunities to mobilize capital.

In addition, geopolitical factors also affect the market's recovery momentum, he added.

The expert assessed that the social housing segment will continue to be promoted by the government and will see better development than the previous period. However, this segment cannot lead the market because it still faces many obstacles in the implementation process.

In the apartment segment, new supply is forecast to increase compared to 2023, with about 15,000 units in Ho Chi Minh City and surrounding areas (Dong Nai, Binh Duong, Long An and Ba Ria-Vung Tau) but still far behind from the 2018-2020 period as legal problems linger.

Many developers will focus on affordable apartment housing (VND45-60 million or $1,850-2,460 per square meter) to serve real needs. “This is the key segment leading the market recovery,” Hoang said, citing from mid-2023, projects of developers Nam Long and Khang Dien have seen an increase in the number of transactions.

Terraced houses and land plots in the suburbs of HCMC are expected to escape from the "frozen" situation, especially projects with reasonable prices.

"In this segment, prices have exceeded their real value and benefits. Look at the townhouse rows of many projects that have been abandoned for a long time as they could not be sold or rented," Hoang said.

Therefore, this segment needs a significant price reduction, especially from developers who are facing cash flow issues, he noted.

Meanwhile, for resort real estate, Hoang held that this segment has not yet been able to keep up with other segments and may be even quieter, because resort real estate is only for people with surplus money. There may be some exceptions from projects with certain favorable conditions and advantages, but it will be very difficult to return to the golden age of 2017-2020.

Housing prices only increase when there are signs of market recovery or some positive macroeconomic factors. The secondary market (buying and selling land plots, terraced houses and apartments) is forecast to become busier. When investors sell their goods, they will look for new investments, he added.