Property market slump to persist until mid-2024

By Ngoc Diem   September 25, 2023 | 02:59 am PT
Property market slump to persist until mid-2024
Office buildings and apartment blocks in Hanoi. Photo by VnExpress/Ngoc Thanh
The legal problems plaguing real estate firms have not been resolved, and could continue until the third quarter of next year, experts and industry insiders warn.

At a forum held in Hanoi to discuss the market’s sustainable development on Sept. 22, Nguyen Van Dinh, president of the Vietnam Association of Realtors, cited a recent survey by his organization that found over 70% of businesses saying mechanisms and policies to mitigate funding difficulties have proven ineffective.

In 2022-23, the number of real estate transactions has fallen by 90%, indicating weak demand.

To facilitate the development of social and workers’ housing, in April, the government launched a credit package of VND120 trillion ($5 billion) to give both buyers and developers access to credit at interest rates that are 1.5-2 percentage points lower than the market average.

Nearly five months have passed, but no disbursement has been made, mainly because there is no supply of social housing.

Hoang Hai, director of the Ministry of Construction’s department of housing and real estate market management, admitted that many housing and urban area projects have faced difficulties, been delayed or stalled because of legal problems related to land, specially valuation and adjustment of urban plans.

Housing and land prices might have fallen from their peak in late 2021, but are much higher than in 2020 before the real estate "fever" began.

At the end of last year, apartments prices were up 5-7% from 2020, while country houses were 15-20% more expensive and land, 30%.

Nguyen Quoc Hiep, president of the Vietnam Association of Construction Contractors, claimed at the forum that 70% of the problems stem from legal issues, especially overlapping laws.

The real estate sector is government by 12 different laws, including on investment, planning, housing, and the real estate business, he said. "My business has a project that is 12 years behind schedule and still not completed because of problems with acquiring land."

According to economist Le Xuan Nghia, the real estate market could remain mired in difficulties until the third quarter of next year.

Experts have called for increasing the supply of affordable housing to help the market recover.

Nghia said the real estate crisis 10 years ago was due to an oversupply of property, but this time it is because of a shortage, especially of low-cost housing.

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