Difficulties prolong Vietnam real estate companies recovery

Due to the tightening of the credit policy, and procedural difficulties, which are leading to the capital bottleneck. Along with that, these are strong factors that cause the execution of approved projects to be stalled of Vietnam's real estate market. So, the city is facing a shortage of real estate supply.

Vietnam real estate is facing a lack of real estate supply

The move to squeeze cash flow into the real estate market; banks increasing deposit rates; bond capital being limited... are strong factors that cause projects to lack capital flow to deploy.

In the first 3 quarters of 2022, the real estate supply persisted to have a clear below trend. Vietnam's real estate supply is mainly in the middle and high-end segments with prices that are not appropriate for those who need housing. The absorption rate in the third quarter of 2022 was only 33.5%, a sharp decline compared to the first half of the year; transaction volume dropped by more than 50% compared to the same period last year.

Particularly, the number of completed commercial housing projects is 17 projects with more than 4,000 units, accordance with 71% compared to the second quarter, corresponding to 34% compared to the same period in 2021. There are 10 projects in the North, with nearly 2,400 apartments, the Central has 1 project and the South has 6 projects with more than 1,700 apartments.

The newly released report on the Vietnam real estate price index of Savills in the third quarter of 2022 also shows that both the housing and office segments in Hanoi and Ho Chi Minh City tend to increase in price. Due to the low supply, prices of luxury and mid-priced apartments remain high.

On the contrary, the absorption rate tends to go down. In the third quarter of this year, the absorption rate reached 15%, down 54 percentage points quarter-on-quarter, up 1 percentage point year-on-year.

Reasons why the absorption rate tends to go down in Vietnam's real estate market

Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Realtors (VARS), said that the tight new supply for Vietnam real estate market in the third quarter was what was forecasted. 

New supply is affected by the legal process of property projects, making it difficult for construction project owners to execute new projects.

Along with that, the implementation of approved projects is stalled due to the tightening of credit policy and procedural difficulties.

The State Bank of Vietnam (SBV) could also consider increasing its credit quota by 1 or 2% points for the remaining weeks of this year as a boost to the industry. The chairman of HoREA proposed several solutions, including completing modifications to land laws and creating favorable circumstances for homebuyers to access loans and affordable housing.

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