Real estate market in the fourth quarter of 2023 is flourishing, creating momentum for recovery

Transactions increase

The report "Assessing the recovery process of the Vietnamese real estate market in the third quarter of 2023 and forecasting the market situation in the fourth quarter of 2023" by the Vietnam Real Estate Association (Vnrea) has just been completed, clearly stating that liquidity in the real estate market in the third quarter of 2023 has improved compared to the difficult period at the end of 2022 and the first months of this year, so the market has begun to record many "bright spots", especially in localities such as: Hanoi, Hai Phong, Lao Cai, Da Nang, Ho Chi Minh City... where investment in infrastructure and transportation is promoted, with many sources of supply suitable to demand.

In addition, Vietnam's economy is on the path of recovery, a "bright spot" in the world economy that is in a context of weakness and unpredictable fluctuations. Gross domestic product (GDP) is growing with a positive trend, GDP in the third quarter of 2023 increased by 5.33% over the same period last year, disbursement of public investment capital, total domestic retail sales of goods, the number of newly established and resuming enterprises... all have positive results, positively affecting the real estate market.

Furthermore, the State Bank has lowered the operating interest rate four times in a row since March 2023. Bank loan interest rates have been adjusted down significantly, ranging from 6.7% to 10%, approaching the level of early 2022, down from 0.4% to 3.5% compared to the end of the second quarter of 2023. This is a favorable interest rate for home buyers. Buying a house to live in during this period will take full advantage of credit and price levels.

According to a recent survey by the Vietnam Association of Realtors (VARS), up to 60% of investors who have previously participated in the real estate market will continue to invest if interest rates continue to decrease. However, to ensure safety in the context of difficult production and business, and the economy's poor capital absorption capacity, investors will be more cautious in choosing, calculating, and exploiting financial loan packages for "deposited" assets, rather than investing entirely in the real estate channel.

In fact, since the beginning of the year, the real estate market has had nearly 20 sub-law documents issued by government agencies, with contents increasingly closer to the actual needs of the market and businesses, on the basis of amendments and supplements in accordance with the national housing strategy. Thanks to that, hundreds of projects have gradually been dismantled and restarted, contributing to creating more confidence and strength for the market.

Statistics from Vnrea show that although the market is not strong enough to "overcome the slope", it has somewhat escaped the risk of "losing its brakes". The number of transactions in the whole market has increased over time with more products suitable for people's needs being introduced to the market. If in the second quarter of 2023, the market recorded 3,700 transactions, an increase of 37% compared to 2,700 in the first quarter, in the third quarter the market recorded nearly 6,000 transactions, 1.5 times higher than the second quarter and more than 2 times higher than the first quarter, but in the first 9 months of the year, the number of transactions was only about 50% compared to the same period last year.

"Running"

According to representatives of real estate businesses, the residential real estate market in major cities has shown signs of good absorption, focusing on the apartment segment and houses priced under VND10 billion in the central core area. The land segment has not shown positive signs but has shown signs of growth in the auctioned land type. To ensure the growth cycle of the markets, Vnrea recommends that there should be mechanisms and policies to improve the supply for the market, because the supply is still stagnant, with only about 10% of projects being resolved.

"Housing policies need to target all classes in society. Regulations on beneficiaries of social housing policies need to be changed to be more appropriate. Social housing is not for sale to the rich, but needs to target those with taxable income, savings, but cannot access commercial housing currently priced at a high threshold," said Mr. Nguyen Hoang Nam, General Director of G-Homes Joint Stock Company.

Dr. Nguyen Van Dinh, Vice President of Vnrea, commented that the real housing demand is increasing and will certainly increase along with the economic growth rate, urbanization... in localities with diverse economic development such as Hanoi, Ho Chi Minh City, Da Nang. It is expected that at the Real Estate Forum held at the end of 2023, Vnrea will announce real estate indexes, which will be the basis for project developers to refer to, so that when the project is formed, it can meet 60 - 70% of the actual demand, ensuring the requirements to attract the participation of domestic and foreign investors.

"Along with legal bottlenecks, capital sources will be removed when laws related to the real estate market and business are discussed and considered by the National Assembly at the next National Assembly session. Investor confidence in returning to the market is the final factor that needs to be resolved for the market to truly return to normal. The real estate market in the fourth quarter of 2023 will be a stepping stone for the market to recover from 2024, especially in areas with much room for development, with synchronous and modern planning, infrastructure that is interested in and focused on investment, and prices that are not high...", said Mr. Nguyen Van Dinh.