Property market recovery needs more affordable housing

Experts have warned that the real estate market will continue to struggle with limited access to capital, legal bottlenecks, and a general inability among companies to redeem bonds.

According to the most optimistic scenario, the market will face at least two more challenging quarters before entering a recovery phase in the second half of 2024.

Different property segments will require different amounts of time to regain liquidity and reach their full potential, according to the assessment offered by experts.

A report released by the Vietnam Association of Real Estate Brokers indicates that liquidity in the property market has been gradually improving, with 6,000 transactions recorded in the third quarter, marking a surge compared to previous quarters.

Vo Hong Thang, director of the DKRA Group Market, said more than 4,800 newly-sold properties, which account for 70% of supply, were recorded in the southern region during the third quarter.

However, Thang also pointed out that a strong recovery was not expected in the near future, with the earliest recovery occurring in the second half of 2024.

Initially, properties which meet demand, such as social housing, mid-range and high-end apartments, as well as land in major economic areas, would experience the first signs of recovery.

Other market segments, such as speculative properties, would take much longer to regain liquidity.

Duong Thuy Dung, senior director of CBRE Vietnam, said the mid-range and affordable apartment segment would observe the first upward movement in the third quarter of 2024.

Le Dnh Chung, CEO of SGO Homes, recommended that the Government continue to issue mechanisms and policies aimed at improving supply and purchasing power.

Currently, supply remains stagnant with only about 10% of projects being approved. Though loan interest rates have decreased, they remain relatively high.

A recent survey conducted by Batdongsan website indicates that between 40% and 42% of real estate brokers believe that the recovery of the land plots and low-rise housing segments would occur in the second half of next year.

In contrast, the outlook for apartments is more positive, with 42% expecting an improvement in the first two quarters of 2024 and 30% predicting recovery in the last two quarters of the year, according to the survey.

Nguyen Quoc Anh, deputy general director of Batdongsan, said each segment would have a different recovery time, but the slowest would be in the fourth quarter of 2024 when Government policies fully permeate the market.

Dr. Su Ngoc Khuong, senior director of Savills Vietnam, said the recovery of the market largely depended on macroeconomic policies and the general economic situation.

It’s positive that fiscal and monetary policies were being well managed and the Government had constantly issued solutions in a bid to address the hurdles faced by real estate firms, he said.

The Land Law of 2023, if implemented on schedule, would be effective in the second half of next year, a factor which would help to address bottlenecks in project approvals in new residential areas and restore housing supply in the 2024 to 2025 period, he noted.

Experts predict the sector would not grow strongly until at least 2025. In a bid to help the market recover and develop sustainably, they recommended increasing the supply of affordable housing.

It can therefore be seen as imperative to issue specific regulations in order to speed up the implementation of the VND120 trillion support package for financing social and worker housing projects, experts added.

VOV