|The market is lopsided in regard to product structure due to an excessive number of high-end projects and not enough affordable housing. Photo: D.T |
According to industry professionals, capital is the most demanding aspect of the real estate business. According to Decision No.1435/QD-TTg, this bottleneck will be progressively alleviated by 2023 as the government has created a working party to assess the tough circumstances that firms are facing and areas with stalled projects.
The State Bank of Vietnam (SBV) decided at the beginning of December 2022 to raise the credit space for the whole banking system by 1.5-2 per cent instead of maintaining the growth rate at no more than 14 per cent for the whole of 2022 as anticipated.
According to Dr. Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, the rise in the credit growth limit is still essentially within this year's overall credit cap of 14 per cent. The SBV's decision to ease monetary policy at this time was influenced by macro variables such as inflation and the favourable exchange rate.
In Luc's view, the liquidity of the financial system has increased, which indicates that individuals have begun to return to the banking system to make larger deposits than in the preceding time. In addition, the capital demand of the market, from both individuals and firms, towards the end of the year was particularly high so the granting of more credit will assist in fulfilling this need, promoting production and business throughout the peak season.
Additionally, 16 banks (Vietcombank, Agribank, HDBank, SHB, VIB, ABBANK, and Shinhan Vietnam) have agreed to lower loan interest rates. This action will contribute to the real estate market's recovery and lead to more stable growth.
In addition, the government issued Official Dispatch No.1164/CD-TTg asking relevant units to adhere to Decision No.1435/QD-TTg, which stipulates that real estate enterprises must conduct their own product research to meet market demands. Not content with this, several directives were also issued to ministries and sectors requesting an examination of market and business bottlenecks such as credit and bond issuance.
An Viet Hoa Real Estate Investment's general director Tran Khanh Quang believes that the SBV's decision to boost the available credit will generate optimism in the real estate sector.
Due to a scarcity of funding, quite a few real estate projects are being developed, however, homebuyers confront challenges because they lack access to loans to purchase a property. The unfettered flow of funds will enable investors to continue implementing their projects and prospective homeowners will be more able to achieve their goal of settling down.
Dr. Tran Kim Chung, chairman of CT Group, concurred and expressed optimism about the real estate market's funding source. Credit will be more readily available in 2023 than in 2022 as a result of the decision to increase limits for commercial banks, generating momentum for companies to function in 2023.
Moreover, the source of capital from the stock market is tending to expand once again. If the stock market climbs to 1,300-1,400 points, significantly more funds will be invested in the economy and real estate market.
In addition, the bond market is rebounding steadily. This remains a significant source of money for the economy and the real estate sector. Chung expressed hope for a prosperous market in 2023 based on these encouraging factors.
Luc said that based on Vietnam's economic prospects this year, the real estate market is indicating favourable conditions. The economy will rebound rapidly, the growth drivers will return more robustly, including the revival of domestic tourism, core inflation will remain under control, and the interest rate will climb in accordance with the forecast.
In addition to economic reform, institutional development, public investment, the digital economy, the green economy, and the circular economy will be supported. There are also encouraging signs from the government regarding the elimination of legal obstacles.
"The government's special task force is examining tens of thousands of projects with legal issues and is also stepping in to eliminate complications," Luc explained.
In addition, Nguyen Quoc Anh, deputy general director of Batdongsan.com.vn, predicted that the market would exhibit symptoms of reversal and equilibrium by the end of 2023. The market is anticipated to expand more rapidly in 2024.
Regarding the 2023 market trend, a greater emphasis will be placed on real estate assets with genuine worth that create cash flow to assist real estate purchasers in mitigating the present challenges. When the market rebounds, speculative items that were the first to fall will be the first to soar.
According to Quoc Anh, given the present market circumstances that continue to exist, properties like flats and townhouses may provide purchasers with capital gains and more stable cash flows.
"According to a study of market brokers, over 50 per cent of respondents believe the market will rebound in the second quarter of 2023. This is a good indicator of market players' confidence," said Quoc Anh.
Quoc Anh also stated that in order to adapt to the current market reality, real estate companies must make the necessary adjustments, restructure their business activities, and patiently await signals from interest rates, credit growth, and the government's efforts to eliminate legal obstacles.
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This was stated by Le Viet Hai, vice president of the Saigon Construction & Building Material Association (SACA), during the Dynamics of Vietnam's Economic Development 2023 seminar held on December 14 in Hanoi.
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Capital bottlenecks, liquidity losses, and regulatory limitations make 2023 property market predictions difficult. But there are a number of clear positives.