Anticipating the property market will fall into a recession in 2023

Mr. Le Hoang Chau - Chairman of Ho Chi Minh Real Estate Association (HoREA) said that with the way liquidity had been plunging Currently, Vietnam's real estate market could fall into a recession the following year (2023). 

On the morning of November 8, the Government Office held a meeting on tackling the property market challenges

Generally, the property market is currently facing the risk of deep liquidity decline, and the risk of falling into a recession next year. 

Nowadays, several real estate corporates are facing the risk of falling liquidity and might have to make painful decisions to survive.

Lots of property developers are downsizing their businesses as can be seen by suspensions, investment, or construction delays. They have also stopped implementing new projects, issuing new shares, or launching initial public offerings. These actions will affect economic recovery and decline in the government’s revenues. Some property developers had cut their workforce by up to 50%.

Mr. Le Hoang Chau - Chairman of Ho Chi Minh Real Estate Association (HoREA)

With banks’ credit quotas full and tighter controls over the bond market, property developers are "starving" for capital and must borrow from unofficial lenders at a high-interest rate (up to 40-50% of contract value), which means future projects will contain great risks.

Furthermore, the selloff of many projects could create an opportunity for foreign investors to take over and steal the advantages hitherto enjoyed by domestic companies, which have been leading the market.

With a global economic recession and supply chain disruption anticipated next year, Vietnam’s property market could take a serious hit.

Besides, in the first 2 quarters, the unsold inventory of 45 major property developers was valued at VND273.37 trillion, accounting for more than half of their combined asset value.

Here are some proposed solutions from the chairman of HoREA

The chairman of HoREA proposed several solutions, including completing amendments to land laws and creating favorable conditions for homebuyers to access loans and affordable housing.

The State Bank of Vietnam could also take into consideration increasing in credit quota by 1 or 2% points (estimated at 100.000 - 200.000 billion VNĐ) for the remaining weeks of this year as a boost to the industry. In addition, facilitating individual investors who aren't professional investors to buy bonds with a certain cap will also relieve the capital bottleneck that property developers are facing.

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