Property market to remain listless

Demand for residential property, especially apartments, plunged in the third quarter despite discounts and loan incentives offered by developers to boost sales, Vo Hong Thang, research and development deputy director at property developer DKRA Group, said.

The apartment absorption rate in Ho Chi Minh City was 15%, the lowest since 2019, while unsold inventories rose to a four-year high of 66% of primary supply, according to property consultancy Savills.

Cushman & Wakefield said sales fell by half starting July, and the Vietnam Association of Realtors said property sales have been plunging this year.

Online listing platform Batdongsan saw searches for properties in HCMC, Hanoi, Danang, and Can Tho drop by 14-19% year-on-year.

The market is facing a number of challenges like housing projects stalling due to lack of funds, Batdongsan deputy CEO Nguyen Quoc Anh said.

The lack of funding is the main reason for the slowdown, he said, pointing out that increased government scrutiny of bond issuances following frauds worsened the problem.

Ho Chi Minh City Real Estate Association (HoREA) chairman Le Hoang Chau said the challenges faced by the industry now are greater than during the last crisis 10 years ago.

Red tape, expiry of banks’ credit quotas, and difficulties in raising funds are the industry’s main issues, and even leading companies are in trouble because of declining resources, he said.

The shortage of capital is likely to continue throughout next year.

Huynh Phuoc Nghia, a senior executive at consultancy GIBC, said most Vietnamese investors seek short-term profits in the property market and long-term investors are rare.

This means that when the market goes sideways or declines, people are quick to sell out as they lack the ability to hold on to their asset, he added.

“Low demand and the lack of resources could push the property market into a long slump.”