Domestic real estate market boom unlikely in 2023

The property market expects more advantages from new regulations effective to recover next year, such as decrees No 44/2022/NĐ-CP and 42/2022/NĐ-CP. Photo: tienphong.vn

HÀ NỘI — Việt Nam's real estate market is unlikely to boom next year, according to experts.

Trần Kim Chung, former deputy director of the Central Institute for Economic Management, said that in the context that there is no sudden change in capital source and new policies will not be approved until the end of 2023, the market next year could continue to adjust towards to more substantive direction.

The market expects to have new dynamics from the promulgation and amendment of the three laws relating to the property market, including the Law on Land, the Law on Housing, and the Law on Real Estate Business. 

Chung said the market boomed in 2019-2021, so a large part of finance is needed in 2022 and 2023 to pay for the transactions in those two years. But now the financial source reduces than expected.

In addition, some businesses have frozen assets due to legal issues, while some other enterprises are having difficulty in finance.

Changes in credit policies relating to interest rates and exchange rates will affect the real estate market, Chung said.

Sử Ngọc Khương, Senior Director of the Investment Consulting Division Savills Vietnam, said that Vietnam's economy and finance would also be significantly affected by the fluctuations in the world, such as inflation, exchange rates, scarcity of petroleum and socio-political instability in many countries.

The real estate market suffers from these economic impacts. Therefore, Khương predicts that in 2023, the property market will change quite cautiously.

For market liquidity, the residential segment will maintain stable liquidity. However, the limit ed supply and absence of affordable products will affect liquidity. 

Segments such as industrial and office real estate are still doing well, and businesses will continue to need to expand, he said.

For financial issues, according to Khương, unfinished projects need to be disbursed capital to continue the construction process, creating new supply for the market.

In addition, investors need additional capital from foreign investment, investment funds or joint ventures to solve complex financial problems.

“It is necessary to have legal support for enterprises developing property projects for a strong recovery in the domestic market. We hope that in the coming time, these bottlenecks will be removed soon to create a healthier and more favourable business environment for investors as well as solve the problem of housing supply for the majority of people. That helps them own a more reasonably priced house," he said.

“Recently, one of the notable trends is that new products are moving away from the inner city and located in the suburban area, where the products would be supplied to the local people and the people working in Hà Nội or HCM City. The transport infrastructure system is still being invested in expanding, creating favourable conditions for this trend," Khương said.

According to the latest forecast from the Finance – Economics – Real Estate Institute of Dat Xanh Services (FERI), shortly, the market supply will still be in severe shortage due to the continued tightening of real estate management. Meanwhile, social housing projects have yet to be implemented. With a cautious mentality, customers have turned to keeping money, leading to a frozen market. Moreover, the increase in interest rates of loans and limit ed credit "room" make it difficult for even genuine home buyers to access loans.

FERI recommends that customers limit  their participation in the market with the purpose of speculation or long-term investment. Before deciding to buy, investors should assess their needs and choose products suitable for their financial ability. Individual investors no longer risk chasing the "wave" of speculation. Instead, they prioritise projects having transparency and reputable investors to have a purpose of long-term investment, FERI said.

The property market expects more advantages from new regulations effective this year to recover next year. They include decrees No 44/2022/NĐ-CP on developing a database about the real estate market, 42/2022/NĐ-CP on the provision of online information and public services by the State agencies in the cyber environment, Decree 65/2022/NĐ-CP on the bond market, and new policies on land under Resolution 18-NQ/TW.

Significantly under Decree No 44/2022/NĐ-CP, Việt Nam will develop a database about the real estate market, including information on the country-level, local-level, project-level, transactions and market statistics.

The country and local-level database include legal documents, project information and transactions, tax data, real estate broker certificates, outstanding loans, foreign direct investment in real estate and bond issuance of real estate enterprises.

The project-level database includes general information, licenses, types of real estate projects, transactions, prices and inventories.