"Real estate may recover by the end of next year at the latest"

Research data from the Vietnam Association of Realtors (VARS) shows that liquidity in the real estate market is gradually improving compared to the difficult period at the end of last year and the first months of this year. In the third quarter, the country recorded 6,000 transactions, 1.5 times higher than the second quarter and more than twice as high as the first quarter.

Mr. Vo Hong Thang, Market Director of DKRA Group, also commented that the current state of the real estate market has changed more positively than at the beginning of the year. In the third quarter alone, the Southern region had more than 4,800 new real estate products (including apartments, land and low-rise houses) for sale. Of which, 70% of the supply was absorbed, equivalent to 3,200 units successfully sold.

According to Mr. Thang, from now until the end of the year, the real estate market will move in a more positive direction. In the fourth quarter, the southern market will have an additional 350-420 land plots, 1,200-1,600 apartments and about 450 townhouses for sale. The supply is not much, so the overall demand in the whole market is expected to increase thanks to the interest rate reduction and the high psychology of buying real estate at the end of the year.

However, according to Mr. Thang, we cannot expect real estate to have a strong recovery right away. In the first half of 2024, the market will be less difficult than it is now, but to successfully "reverse" it will have to be the second half of 2024 at the earliest.

"Types that meet real needs such as social housing, class C and class B apartments, and land near large economic zones with full amenities, which can be used for housing or business, will recover first. Investment and speculative products will take another 2-3 quarters to restore liquidity," Mr. Thang analyzed.

Sharing the same view, Ms. Duong Thuy Dung, Senior Director of CBRE Vietnam, said that the mid-range and affordable apartment segment will have the first upward movement around the third quarter of 2024. Land, villas, townhouses/adjacent houses, high-value products, should recover later than apartments, at the earliest by the end of 2024 or by 2025 to escape difficulties and clearly improve.

According to Mr. Le Dinh Chung, Member of the VARS Market Research Working Group, General Director of SGO Homes, the housing market in major cities has shown signs of bottoming out. However, to ensure the expected growth cycle, there needs to be mechanisms and policies to improve supply as well as purchasing power. Currently, supply is still stagnant, with only about 10% of projects being cleared. Bank interest rates have decreased but are still quite high compared to borrowers' expectations.

"Projects need a relatively long time to be implemented and qualified for sale. Expectations for market recovery may occur in the second half of 2024," he said.

A recent survey conducted by Batdongsan on nearly 500 brokers showed that about 40-42% of respondents believe that the second half of next year will be the time for recovery of the land and low-rise housing segment. Apartments have a more positive indicator when 42% believe that it will improve in the first 2 quarters of 2024 and 30% believe that the recovery point will still fall in the last 2 quarters of the year.

Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan, said that each segment has a different recovery time, but the latest is in the fourth quarter, when the Government's policies permeate the market.

"Positive developments from the Government's economic, financial and monetary management policies are creating a more positive sentiment for the market, contributing to orienting real estate demand back to real value. The real estate market will reverse in 2024 under the condition that macroeconomic management policies continue to be positive as they are now," Mr. Quoc Anh shared.

Also stating that the recovery of real estate depends largely on macroeconomic management policies and the general economic situation, Dr. Su Ngoc Khuong, Senior Director of Savills Vietnam, said that fiscal and monetary policies are being well regulated. The Government and the Prime Minister have issued many directives with very drastic measures to remove difficulties and obstacles for the real estate market and businesses such as Decree 08, Resolution 33, Decision 388, Decree 10.

In particular, the 2023 Land Law, if applied on schedule, will take effect in the second half of next year, thereby resolving bottlenecks in project approval in new residential areas, helping housing supply recover in the 2024-2025 period. "It is expected that in the next 12 months, real estate will begin to receive positive changes because new policies will begin to have an effect on the market after a while," Mr. Khuong emphasized.

According to Associate Professor, Dr. Trinh Dinh Thinh, the Government, ministries, departments and branches have taken drastic measures to resolve difficulties in the real estate market, thereby removing obstacles in mechanisms, policies, administrative procedures and access to capital. The market itself is in the process of restructuring its operations. Investors are considering focusing resources on feasible projects, promoting the return of cash flow.

"The restructuring process is underway and it takes time to move from plan to reality. Therefore, the market's changes will only be evident from the second quarter of 2024," said Mr. Khuong.

However, experts also note that the recovery of real estate will not follow a V-shaped chart but will be U-shaped. It will not enter a strong growth phase until 2025. The recovery is expected to start from the housing market in large cities and then gradually spread to neighboring satellite cities.

One point to look at is that real estate depends on macroeconomic policies. This means that if policies cannot be absorbed strongly enough, the expected recovery momentum of the market is still at risk of being broken.