Real Estate Market Flourishes, Setting the Stage for Recovery in Q4 2023

The positive economic growth forecasts for Q4 2023 are driving a surge in real estate demand across all segments, propelling market recovery.

Transaction volumes are on the rise.

The report "Assessment of the Real Estate Market Recovery Process in Vietnam in Q3/2023 and Forecast for Q4/2023" by the Vietnam Real Estate Association (Vnrea) highlights significant improvement in market liquidity in Q3/2023 compared to the challenging period at the end of 2022 and early this year.

The real estate market is witnessing bright spots, particularly in key areas such as Hanoi, Hai Phong, Lao Cai, Da Nang, and Ho Chi Minh City, where infrastructure and transportation investments align with demand. Additionally, Vietnam's economy is emerging as a global bright spot amid uncertain and weakened global economic g

Real Estate Market Shines, Paving the Way for Recovery in Q4 2023.

The domestic Gross Domestic Product (GDP) is showing positive growth trends, with Q3/2023 GDP increasing by 5.33% compared to the same period last year. Public investment disbursement, total retail sales of domestic goods, the number of newly established businesses, and their return to operations all yield favorable results, positively impacting the real estate market.

Moreover, the State Bank of Vietnam has lowered the operating interest rates four times since March 2023. Bank loan interest rates have significantly decreased, ranging from 6.7% to 10%, approaching the levels of early 2022 and reducing by 0.4% to 3.5% compared to the end of Q2/2023. These favorable interest rates benefit homebuyers, allowing them to optimize credit advantages and pricing.

According to a recent survey by the Vietnam Real Estate Brokers Association, up to 60% of investors who participated in the real estate market previously will continue investing if interest rates continue to decline.

However, amidst challenging business environments and weak economic capital absorption, investors will exercise caution in choosing and utilizing financial packages for their "deposited" assets, rather than investing entirely in real estate.

In the course of this year, nearly 20 legal documents related to real estate have been issued by Government agencies, increasingly aligning with market and business realities. As a result, hundreds of projects are gradually being unblocked and restarted, contributing to building confidence and strength in the market.

Vnrea's statistics reveal that although the market is not yet strong enough to "overcome the hill," it has somewhat escaped the risk of a "brake failure." Transaction volumes across the entire market are increasing over time, with more products meeting people's needs entering the market.

While Q2/2023 recorded 3,700 transactions, a 37% increase from the 2,700 in Q1, Q3 observed nearly 6,000 transactions, 1.5 times that of Q2 and more than twice that of Q1. However, over the first nine months of the year, the volume of new transactions is only about 50% compared to the same period last year.

According to representatives from real estate businesses, the residential real estate market in major cities is showing signs of good absorption, focusing on the condominium segment and houses priced below VND 10 billion in the central core area.

The land segment has not shown positive signals yet, but there are signs of growth in auctioned land. To ensure the growth cycle of the markets, Vnrea recommends mechanisms and policies to improve supply sources for the market. Currently, only about 10% of projects have been unblocked.

"Housing policies need to target all segments of society. The criteria for enjoying social housing policies need to be more appropriate. Social housing is not just for the rich but should also target those with taxable income, accumulations, and those unable to access existing commercial housing at high prices," shared Mr. Nguyen Hoang Nam, General Director of G-Homes Joint Stock Company.

Dr. Nguyen Van Dinh, Vice Chairman of Vnrea, believes that real demand is increasing and will surely rise with the economic growth rate, urbanization in economically diverse areas such as Hanoi, Ho Chi Minh City, and Da Nang.

Expected to be announced at the real estate forum at the end of 2023, Vnrea will release real estate indices, providing a reference for project developers. This aims to ensure that when projects are formed, they can meet 60-70% of actual demand, meeting the requirements to attract the participation of domestic and foreign investors.

"Together with legal bottlenecks, capital will be released when laws related to the real estate market and business are discussed and reviewed at the upcoming National Assembly session. Investor confidence returning to the market is the last factor that needs to be addressed for the market to truly return to normalcy. The real estate market in Q4/2023 will be a stepping stone for market recovery from 2024, especially in areas with ample room for development, comprehensive planning, modern infrastructure, and reasonable prices," said Mr. Nguyen Van Dinh.


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