Unstable signs plague property market: experts

By Vu Le July 19, 2022 | 12:55 am PT

Several worrying factors, including declining sales and shortage of supply, are plaguing Vietnam’s property market, which could cause instability, experts say.

Starting from the last quarter, the number of transactions has been declining as both buyers and property developers struggle to access loans, Le Hoang Chau, chairman of Ho Chi Minh City Real Estate Association (HoREA), told VnExpress.

Developers are also recording challenges in mobilizing capital from bonds, as shown by a quarter-on-quarter decline of 79 percent in property bond issuance in the second quarter, which shows they are "thirsting" for funding and that their cash flows are disrupted, he added.

Pham Lam, deputy chairman of Vietnam Real Estate Association, shares the same concern.

The property market in the last six months is set to enter a "rain season" due to the impact of tightened credit and low sales, he said.

Although the State Bank of Vietnam has affirmed that property credit growth hit over 12 percent in the first five months and was higher than the rate recorded in the same period in recent years, industry insiders have repeatedly complained that they struggle to acquire loans as banks claim to have reached their "ceiling" in property loans.

Chau also said that another problem of the property market is shortage of supply, especially in the affordable segment.

From January 2021 to June this year, no apartment with a price tag of VND30 million or lower per square meter was launched in HCMC, he said.

The city instead saw the high-end segment account for 74 percent of supply, with the remaining 26 percent comprising the mid-priced segment, he added.

The shortage of affordable properties has had a direct impact on the low-income and vulnerable people of the city, Chau said.

Another worrying factor is the delay in the legal approval process that stops developers from estimating when their projects would be completed, he said.

The chairman of HoREA called on the government to relax its grip on property credit and let banks fund the projects of developers of good reputation.

"Banks need to resume the provision of loans to developers of good reputation to fund their projects. They should also let individuals borrow to buy or construct residential properties."

Economist Dinh The Hien said this year might not be an ideal period for the property market as prices have risen to a record high amid low liquidity.

"The difficulties of the property sector have only just begun."