How will the real estate market perform in the last 6 months of the year?

Speaking at the recent workshop "Market and price developments in Vietnam in the first 6 months of the year and forecast for the whole year 2024", Associate Professor, Dr. Tran Kim Chung, former Deputy Director of the Central Institute for Economic Management, stated that in the last 6 months of the year, the real estate market is expected to change from good to very good.

According to him, with the 3 laws related to the real estate market including the 2024 Land Law, the 2023 Housing Law, and the 2023 Real Estate Business Law taking effect from August 1, 5 months earlier than the law, the market will move out of the waiting state for half a year. In addition, the economy continues to develop steadily, public investment is accelerated, a large amount of capital will be disbursed. The real estate market will benefit from that.

Mr. Chung also gave 3 scenarios for the market from now until the end of the year.

In the first scenario, the market moves sideways, extrapolates, and progresses. This is the main option because the real estate market moves from waiting mode to execution mode.

“With 3 laws related to the real estate market expected to take effect, many businesses have planned to operate in 2024 as a standby mode because adjusting production and business takes time. Therefore, the real estate market in the last 6 months of the year will not have many major fluctuations but will mainly operate as expected but with a more positive trend.", Mr. Chung said.

The second scenario is a market that grows but does not boom. This scenario occurs if additional factors converge, such as a positive economic and global context, continued good macroeconomic performance, contained inflation, a well-managed 30% increase in basic wages for workers and 15% for pensioners, and foreign investment that attracts one or more strategic investors.

The third scenario is a booming market. This scenario will happen if a number of particularly positive conditions converge, such as strategic investors coming to invest and seek investment opportunities in Vietnam as in the 2004-2007 period; tourism develops strongly again, the macro economy booms, derivative financial instruments such as real estate investment trust funds, mutual savings funds; the re-mortgage system is formed; the condotel-officetel issue is handled in writing, the mechanism for reclaiming land adjacent to infrastructure works is operated synchronously and fully; the pilot mechanism for recognizing investors of commercial housing projects when investors already have land but it is not yet residential land to be operated...

"The above scenario is considered to have too many expected factors, it can still happen but the possibility is not high.", Mr. Chung expressed his personal opinion.

Also commenting on the developments of the real estate market in the last 6 months of the year, Mr. Le Dinh Chung, General Director of SGO Homes Real Estate Investment and Development Joint Stock Company, said that the real estate market will continue to receive positive developments.

Regarding the apartment segment alone, Mr. Chung said that Hanoi apartments will continue to have an upward trend in selling prices with an average increase of 5-10% from now until the end of the year. This increase will continue next year because in the short term, Hanoi apartment supply will not have any significant changes.

In fact, the price level of apartments in Hanoi is increasing, currently the average price fluctuates from 50-100 million VND/m2. Projects with prime central locations have selling and transaction prices of up to 100-150 million VND/m2. Mr. Chung believes that when the price of apartments in Hanoi increases too much, it means that the demand for apartment investment will decrease sharply in the near future. Investment cash flow will tend to shift, looking for new segments and markets.

According to Mr. Chung, the group of customers with 5-10 billion VND in finance have started their journey to find new land because they have almost no opportunity to invest in the Hanoi market because the prices of apartments, villas, and townhouses are too high.

Therefore, from May onwards, satellite cities and suburban areas such as Hung Yen, Bac Ninh, Bac Giang, Hai Duong, Phu Tho, Hoa Binh, etc. are the “targets” of investors. With suburban products in the above provinces, the market is recording signs of recovery in the price range under 10 billion VND/product.

Notably, besides buying for investment, the market has seen the emergence of a group of people who buy houses to live in, not to do business.I see demand shifting to the suburbs as the number of people buying for housing is higher than the number of people buying for investment.", Mr. Chung said.

According to Mr. Chung, after going through the ups and downs of the market in the previous 2 years, the market has been forming a generation of professional and methodical investors. The taste of these investors is towards products with houses on land. They choose products in urban areas, houses attached to land, accompanied by essential utilities and services, meaning they value the sustainability of the product.

Mr. Nguyen Quang Huy, CEO of the Faculty of Finance - Banking, Nguyen Trai University, predicts that, along with real estate projects having legal issues resolved and a strong economic recovery in the last 6 months of the year, the product segment with a price of 2-4 billion/product will receive the most attention and have the fastest liquidity, which are apartments, subdivided land, townhouses, and condotels.

The industrial real estate group will continue to attract FDI and domestic investment capital because this is a product line with sustainable growth and is in line with the country's development trend. However, this segment requires investors to be professional, have large capital, and be proactive in attracting secondary investors, which are businesses investing in factories, warehouses, etc.

The high-end segment with prices under 10 billion will have an improvement in liquidity when projects are eligible for sale and banks disburse loans to customers, but it will recover unevenly. Meanwhile, the super luxury segment needs to find its own way to attract super VIP investors domestically and abroad.