Domestic real estate market boom unlikely in 2023

Hanoi (VNS/VNA) - Vietnam's real estate market is unlikely to boom next year, according to experts.

Tran 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 a more substantive direction.

The market expects to have new impetus from the promulgation and amendment of the three laws relating to the property market, namely the Land Law, 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 sources have reduced beyond expectations.

In addition, some businesses have assets frozen 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.

Su Ngoc Khuong, Senior Director of the Investment Consulting Division Savills Vietnam, said that Vietnam's economy and finance will 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, Khuong predicted that in 2023, the property market will change quite cautiously.

For market liquidity, the residential segment will maintain stable liquidity. However, the limited 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 Khuong, unfinished projects need to have capital disbursed 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.

According to the latest forecast from the Finance – Economics – Real Estate Institute of Dat Xanh Services (FERI), the market supply will still be in severe shortage in the short term 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 limited credit "room" make it difficult for even genuine home buyers to access loans.

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