Efforts to "break the ice", when will the real estate market warm up?

It is forecast that the real estate market will reverse in 2024. Photo: H.Anh

With a series of legal bottlenecks and credit policies being urgently removed and applied shortly, experts predict that from the end of 2023, the beginning of 2024 onwards, the real estate market will warm up.

Will the market reverse in 2024?

At the beginning of 2023, a series of positive actions impacted the real estate market, such as interest rates showing signs of cooling down after Decision 313/QD-NHNN was issued; Decree 08/ND-CP helpedrelieve pressure on bond payment for businesses and restoredconfidence in this market. Also, Resolution 33 issued on 11/3/2023 is considered an opportunity to "unfreeze" legal factors and capital bottlenecks for real estate. Notably, the official approval of a credit package of 120,000 billion VND to develop social housingand housing for workers with a preferential interest rate of 8.3% also contributes to quenching the thirst for housing.

According to Nguyen QuocAnh, Deputy General Director of Batdongsan.com.vn, Government policies are expected to take some time to enter the market but have helped bring about positive sentiment and contributed to the recovery momentum faster shortly. "Positive developments from the Government's economic, financial and monetary policies are creating a more positive sentiment for the market, contributing to orienting real estate demand back to real values. However, the real estate market will reverse in 2024 in the condition that macro-management policies continue to be as positive as they are now," said Nguyen QuocAnh.

According to economic expert Can Van Luc, never in a month has the Government made four extremely important decisions for the market. That is Decree 08 removing corporate bonds in which real estate enterprises; Project 338, dated April 3, 2023, on investment and construction of at least 1 million social housing apartments from now to 2030; Decree No. 10, dated April 3, 2023, guiding the Land Law, supplementing regulations on granting ownership rights to tourism and resort real estate and Resolution 33 on several solutions to remove and promote the development of the real estate market Safe, healthy, sustainable. This Resolution is extremely comprehensive, removing difficulties and obstacles for the market in all three groups of legal issues, capital sources and social housing. According to Luc, with these important decisions, the real estate market will recover clearly from the end of this year onwards;this is when legal casesand fundamental violations are handled satisfactorily, and long-term amendments are made. Limitations related to Land Law, Housing Law, and Real Estate Business Law will be clearer, and at the same time, this is also the time when support packages, especially credit support, are implemented.

Market movements showed that the interest in products that meet real needs recorded good growth in the context of poor liquidity in general. In particular, the data of Batdongsan.com.vn recorded a strong growth in searches for the keyword "social housing" nationwide. Although this move shows that the Government's intervention to promote the affordable housing segment has begun to promote the transformation of the real estate market, the product line with affordable prices serving real needs still has great attraction and is expected to play a key role in reviving the market's liquidity in the coming time.

It takes time for the natural "defrost"cycle

According to the Vietnam Real Estate Brokers Association, from the middle to the end of the first quarter of 2023, the market gained more confidence from the Government's troubleshooting solutions. After a series of solutions such as Decree 08, Resolution 33, Circular amending and supplementing Circular No. 16/2021/TT-NHNN, the move to reduce interest rates by banks is contributing to speeding up the process of reversal market dimension. When policies are gradually absorbed with efforts and companionship from all sides, the market will be ready to enter the "defrosting" cycle. However, this cycle is "defrosted" naturally, takes time, and will happen very slowly. The first quarter of 2023 is considered to be near the end of the "natural screening" process. After this time, the market will record the removal of a series of unsuitable objects from the game, including real estate businesses to real estate brokers. This is the basic premise so that the market will then develop in a more selective, transparent, sustainable and certain way.

According to Nguyen Van Dinh, Vice Chairman of the Vietnam Real Estate Association, the market is waiting for the final move to remove the knot, which is also the most important one, which is the adjustment of legal regulations, to approve the decision. Approving thousands of investment projects, real estate project development is still waiting for the new law. However, with the efforts of both the Government and localities, and the financial restructuring efforts of real estate enterprises, the market is expected to start recovering from the end of the third quarter of 2023.

Sharing with the press, Do Thu Hang, Senior Director of Consulting Department, Savills Hanoi, said that Resolution 33 is one of the documents that have a very positive impact on the market. This Resolution provides guidelines and shows the Government's determination to support the real estate market. However, at this time, the real estate market needs drastic direction from the Government to be able to have effective solutions to remove difficulties and support the parties involved in completing the legal framework for the housing market, especially in removing difficulties related to finance and capital flow for project development, thereby removing supply bottlenecks and strengthening investors' confidence.

"The fact is that the Resolution sets the path, with the determination of participation of state agencies as well as related parties, but we also need to note that the recovery of the housing market depends on many milestones related to the approval of draft laws and implementing decrees and documents. Thus, it is clear that from now until the end of the year, there will be solutions to remove difficulties for the supply, but the supply will not be able to improve strength, especially the supply related to affordable housing. Although there is information related to social housing development, every policy has a certain lag. Therefore, it is expected that from the end of 2023 as well as to 2024 and the years after, the real estate market can recover and develop at a normal pace for the housing segment," said Hang.