By mid-2022, a series of tighter regulations had caused a sharp contraction in property supply, weakening the market's liquidity. In the first quarter of 2023, the horizon seemed brighter due to determined efforts from the government to implement policies aimed at unravelling bureaucracy, but one expert paints a starker picture.
Speaking at a recent discussion on Vietnam's real estate landscape in early October at the ASEAN+3 Macroeconomic Research Office, Nguyen Van Dinh, chairman of the Vietnam Association of Realtors (VARS), said, "In the decade since the start of the last crisis, the property market's robust growth has been evident. However, current glaring shortcomings are evident as regulatory and financial obstacles clog the market, impeding growth."
"At the beginning of 2023, transactions from the previous three quarters amounted to around 10,000 units in primary markets, a mere shadow – less than 10 per cent – of the numbers seen in 2018 and 2019 before the Covid-19 pandemic," said Dinh.
In light of the most recent developments, the decision to postpone certain lending restrictions in Circular No. 06/2023/TT-NHNN is emblematic of the government's receptivity and commitment to improving the situation.
"There's a strong possibility of a significant price correction by late 2024 or early 2025, even though Vietnam's real estate market is forecast for mid to long-term growth," said Dinh. "A recent VARS survey revealed that just around 23 per cent of firms can hold on this year without any macroeconomic policy interventions."
"Real estate developers that leverage high-risk situations face escalating default risks. Firms are dealing with mounting bond maturity pressures, and the number of firms delaying payments is increasing. Over the next couple of years, many firms will need to pay more during bond extension negotiations with bondholders," he said.
"Furthermore, to revive liquidity, businesses should focus on projects that cater to the needs of the vast majority, such as low-cost and social housing," Dinh added.
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