“Overcoming hardships” – Real estate market predicts “bright colors” in 2024
The entire system gets involved
In 2023, the Government has issued many directions to implement synchronized policies, tasks, and solutions to overcome difficulties in the real estate market, especially legal and capital issues.
In February 2023, the Government leaders chaired a conference on overcoming and promoting the safe and sustainable development of the real estate market. The conference aimed to assess the current situation of the real estate market, the difficulties, and propose solutions for the real estate and related sectors to continue developing in a healthy and sustainable manner.
In March 2023, the Government issued Decree 08 on the removal of corporate bonds, including real estate bonds. This is a legal basis for businesses to negotiate with bondholders on debt rescheduling, discounted asset sales, asset swaps for bonds, etc. Also in March 2023, Resolution 33 on some solutions to overcome difficulties and promote the safe, healthy, and sustainable development of the real estate market was issued.
Regarding the legal obstacles for tourism real estate, Decree No. 10 was issued to supplement regulations on granting ownership rights to tourism real estate.
In August 2023, at an online conference to evaluate the implementation of Resolution 33/NQ-CP dated March 11, 2023, by the Government and propose solutions to overcome difficulties and obstacles for the real estate market, many obstacles and barriers were discussed and solutions were proposed. The head of the Government once again emphasized the resolute spirit of “solve difficulties at the level they arise.”
To further boost capital flow, the Government continued to direct the State Bank to lower interest rates for loans to support business recovery, production, and business development. Under the Government’s guidance, the State Bank continuously took actions to lower interest rates.
Throughout the year, the Prime Minister also issued directives to relevant ministries and localities in removing difficulties and supporting businesses and the real estate market to develop stably and sustainably.
Especially, Directive No. 1376/CD-TTg dated December 17, 2023, on the continued implementation of resolute, timely, and effective solutions to promote the safe, healthy, and sustainable development of the real estate market, was issued. The directive was issued in the context of positive changes in the real estate market but still facing many challenges.
Notably, at the 6th session of the 15th National Assembly in November 2023, the National Assembly passed the Housing Law and the Real Estate Business Law (amended) which would significantly resolve the “shackles” that are restraining the market and businesses. The Land Law is also expected to be passed in the nearest session to synchronize the legal framework for this sector.
According to Mr. Nguyen Duc Lap – Director of the Research and Training Institute for Real Estate, with relentless, quick, and timely efforts from the Government, ministries, especially the direct guidance of the Prime Minister, they have contributed to “breaking the ice” in the real estate market.
“The new regulations in the Housing Law, the Real Estate Business Law have become a stepping stone for the market to become more transparent and gradually recover. In the coming time, together with the expected passage of the amended Land Law, real estate will have a solid foundation for stable development,” said Nguyen Duc Lap.
Predictions for “bright colors” in 2024
After the efforts of the Government and relevant agencies in market management policies, bright signals began to appear clearly in the real estate market in the second half of 2023. Positive signs such as market liquidity returning and abundant supply have emerged.
The Department of Construction’s report showed that in the last months of 2023, market liquidity increased, no longer stagnant as in the previous period. According to data from the Vietnam Association of Realtors (VARS), real estate liquidity remained low in the first half of the year, began to rebound in the second half of 2023.
In 2024, real estate is predicted to have more bright colors as market management policies are timely and close to reality, acted as a “driver” for real estate to have the momentum to turn around.
After the concentrated efforts to overcome difficulties and support policies from the Government, ministries, and localities, real estate experts expect the real estate market to gradually recover positively and sustainably in 2024.
Economic expert, Mr. Nguyen Minh Phong, believes that although there are still many difficulties and the recovery is uneven across segments, the Vietnamese real estate market has overcome the most difficult period and is experiencing more positive than negative movements both in terms of total supply and demand, input, and output.
Accordingly, the industrial real estate segment will be more vibrant thanks to the increased activities of FDI areas and the deployment of infrastructure projects nationwide. The affordable housing and social housing segments are also expected to have positive shifts and record increased new supply as investors are aware of self-directing product restructuring to develop in line with market trends. However, the high-end commercial housing segment may recover slower as the actual demand cannot change rapidly. 2024 is not expected to have many investors willing to develop this product line.
With the land segment, due to the new regulations on tightening land subdivision activities in the amended Real Estate Business Law and low liquidity throughout 2023, this segment also needs more time to recover. It is forecasted that around the end of 2024, land will be able to change direction. Investors using financial leverage should not participate in the land segment at the current time as well as the beginning of 2024. For large-scale investors with strong financial resources, they have started to seek opportunities recently.
