The real estate market in Vietnam needs a “detonator” to reverse
According to real estate experts, the adjustment of the government’s policies, particularly the financial “stimulus package” will play a significant role in defining the real estate market in the near future.
Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan.com.vn, assessing the real estate market in the first month of 2023, stated that the current market is comparable to the tough time in 2013 and is in desperate need of a “detonator” to assist the market reverse.
According to a report of Batdongsan.com.vn this morning, about 456 new real estate firms registered across the nation in January 2023 (a 35% increase over the same period in 2022).
However, the number of real estate businesses that ceased operations for an indefinite period climbed to 1,448 (a 54% increase); the number of enterprises that dissolved is 153.
In the context of this, expert Nguyen Quoc Anh believes that the Government’s legal and regulatory changes, particularly the “stimulus packages” in terms of finance and capital, would play a significant role in shaping the market in the near future.
For instance, in 2013, when the real estate market was in crisis and transactions were stagnating, Mr. Quoc Anh stated that the Government had enacted the updated Land Law and released a “stimulus package” of VND 30,000 billion with a 5-6% annual interest rate for the social housing segment. These measures have aided in the re-creation of market trading behaviors.
“At the moment, the market also needs specific policies that directly affect real estate buyers and sellers. For example, with a VND 70,000-100,000 billion support package, loan growth stays at 15-16% or more,” Mr. Quoc Anh proposed.
Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn in the South region, predicted that investment capital flow in 2023 will be directed toward items that can be rented out, such as flats, townhouses, and industries. The rationale for this is that this real estate firm has easy access to financing and is secure in the setting of an unbalanced market.
The market reality reveals that demand for rental homes has been high from the end of 2022 until the present. The national demand for real estate rentals surged by 101% in the first month of 2023 compared to the same time in 2022, although the quantity of real estate rental listings declined by 4%.
In Ho Chi Minh City, in January 2023, statistics on consumer search demand surged in all forms of rental real estate, including apartments (up 157%) and hotels (up 107%). Similarly, demand for rental flats and hotels drives the market in Hanoi.
In the first month of 2023, the average rent of flats in Ho Chi Minh City and Hanoi also grew by 4% and 8% respectively compared to 2022 and is presently around VND 13 million/apartment/ month. Hostel costs in Ho Chi Minh City jumped by 18%, while in Hanoi they increased by more than 33%.
According to Mr. Tuan, the above-mentioned price rise is due to the fact that many clients do not have enough money to purchase a home and instead choose to rent. Furthermore, certain units reduce the working model in 2022, so that in 2023 they return to the residential market to rent workspaces with a modest size of 50-70m2 in urban areas.
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