New firms up 0.2% in seven months

However, their total registered capital reduced by 17.1% to VND834 trillion, reported the General Statistics Office.

The real estate sector saw a strong reduction in the number of newly-established firms, with 2,622 ones in the past seven months, down 56.2% annually.

Experts believed that these figures accurately reflect the current challenging situation in the real estate market. The period of its peak growth has passed while difficulties are expected to continue, leading to an increase in the number of businesses that will have to exit the market in the near future.

Survey data from the Vietnam Association of Realtors (VARS) indicated that if the market situation continues to be challenging, up to 23% of real estate companies could only sustain their operations until the end of the third quarter.

VARS Chairman Nguyen Van Dinh said since May 2022, the market has experienced difficulties due to the impact of the pandemic and market growth cycle, as well as the economic slowdown. A series of tightened credit policies, corporate bonds and lingering legal issues in project implementation have also contributed to the challenges.

Interest rates have remained high since late 2022 and despite a downward trend from the beginning of this year, they still remain at a level that is burdensome for businesses, he said.

The high financial cost pressure, coupled with "scarce" cash flow due to unsold inventory, difficulties in raising capital through bonds, and insufficient creditworthiness for loans, has weakened the health of real estate companies. The prolonged state of difficulty not only affects players in the property market but also leads to stagnation in various related industries.

General Director of Phuc Hung Real Estate Services JSC Nguyen Duy Thanh, however, said the market has shown some positive signals due to management policies, including the ongoing finalising process of relevant real estate market-related laws, such as the Real Estate Business Law, Housing Law and Land Law. Moreover, there is a consistent commitment to lower lending rates and expand the credit room to 14% for the entire banking system.