Property market to rebound in mid-2024

In its latest report on the market, real estate research company and buying-selling platform Batdongsan said the “turning point” for the market would be the third quarter of 2024 and not second as it had previously forecast.

Nguyen Quoc Anh, its deputy CEO, said the more conservative forecast is due to several factors, including new laws taking effect, expected economic growth next year and buyer sentiment.

The “turning point” would only mark the end of the decline and recovery would start well after that, he said.

Michael Kokalari, CEO of investment management firm Vina Capital, also believed the worst is over for the market, and as evidence pointed to the increase in transactions after banks slashed mortgage interest rates in August.

The lower rates have helped some apartment developers sell 80% of their projects, driving up premium property prices in HCMC and Hanoi and providing a slight boost to the land segment, the most speculative in the real estate market.

Money has also gradually shifted from bank savings to the stock and real estate markets, a positive sign for the market in 2024.

Can Van Luc, chief economist at state-owned bank BIDV, said 2024 would bring opportunities for the real estate market.

China’s reopening of its borders, the shift in global supply chains and capital flows and the push for more infrastructure and socioeconomic recovery and development programs would be highly beneficial for Vietnam’s economic growth, he said.

Vietnam has inflation and bad debt under control, which attracts capital flows into the housing market, he said. It is also improving planning and infrastructure, and the legal framework for the market, he said.

The Housing Law and Real Estate Trading Law have been amended while the Land Law is set to be amended next year, and this would help remove several legal hurdles plaguing the property market, he said. “Industrial property, housing for [foreign] experts and social housing will begin recovering in 2024 while other segments may need to wait for more policy changes.”

But the housing market also faces challenges, including external risks like the slow growth in the global economy and private investment and the sluggish recovery in tourism.

It also faces cautious investor sentiment and risks related to the bond and credit markets, especially the mounting bond redemption pressure, he added.

Nguyen Quang Thuan, president of financial data provider Fiin Group, said property companies are struggling to find money as all four sources of capital — bank credit, corporate bonds, advance paid by buyers, and equity — are all difficult to access at the moment.

Lending interest rates might be lower in 2024 but banks would continue to closely monitor credit risks and the real estate sector would struggle to convince them, he said.

Banks’ deposits grew by 9.95% in the first nine months of 2023 as against 2.92% in the same period in 2021.

Thuan said people would continue to park their money in banks instead of investing in the first half of 2024, slowing flows into the housing market.

Nguyen Van Dinh, vice president of the Vietnam Association of Realtors, said legal hurdles hampering new property projects might not be cleared until 2025, and so few would be launched or completed next year.

Without new projects, developers would not be able to raise capital through bond issuances or sales, he said.
Anh of Batdongsan said the market cycle consists of four stages in the following order: recovery, expansion, hypersupply, and recession.

He expected the recovery stage to last from the second to fourth quarters of 2024, the expansion stage until the first quarter of 2025, and the hypersupply stage from the second to fourth quarters of 2025, when legal amendments take effect.

“The market will not see much development in the first half of 2024 while the second half will see more transactions, but only marginally.”