The real estate market will gradually warm up and stabilize until the end of the year

VCN - Nguyen Van Dinh (Photo), Vice Chairman of the Vietnam Real Estate Association, commented on the real estate market in 2023.
Mr. Nguyen Van Dinh
Mr. Nguyen Van Dinh

The real estate market at the end of 2022 was quiet, what is the cause of this, in your opinion?

The real estate market's abnormal decline has created bad economic consequences. It directly affected real estate businesses, and then nearly 40 industries that consider the real estate market an output market, such as the iron and steel industry, sand and stone industry, machinery, logistics, and consumer goods for housing. The reason is that the real estate market is experiencing some bottlenecks.

First of all, legal issues, according to the Ministry of Construction, about 70% of enterprises are currently entangled in legal problems. More than 10 laws related to land, investment and housing issues need to be considered.

The second is the bottleneck in credit capital, especially for home buyers, for the consumer market, and the bottleneck in capital creation channels for businesses such as bond issuance and many other capital channels.

In addition, the goods on the market are not suitable for demand, mainly in the high-end segment. Our information system is still weak to serve investment and shopping activities in the market because of a lack of suitable information channels.

In particular, the confidence of investors and consumers is decreasing. If the above bottlenecks are not removed, it will not be able to promote the development of the real estate market and make it difficult for the overall economic development plan of the country.

How do you evaluate the actions to remove difficulties for the real estate market that have been implemented by the Prime Minister in the current market situation?

Prime Minister Pham Minh Chinh has just signed three consecutive notices including Dispatch No. 1156/CD-TTg dated 12/12/2022 on the supply of credit capital for the economy, Dispatch No. 1163/CD-TTg dated December 13, 2022 on the corporate bond market, and Official Letter No. 1164/CD-TTg on removing difficulties for the real estate market and housing development.

I fully agree with the Prime Minister's decision, this is a positive signal for businesses, organizations, and individuals operating in the real estate sector; an opportunity for real estate projects to solve capital flow problems and handle problems related to legal procedures; and it promotes the rapid development of projects as well as contributes to restoring the excitement of the real estate market in the future.

Previously, the Government also set up a Working Group under Decision 1435/QD-TTg to review the difficult situation of businesses and localities with delayed projects.

In Official Dispatch 1164/CD-TTg, the Prime Minister mentioned that real estate businesses must research and consider goods by themselves to suit the needs of the market.

Simultaneously, it is recommended that ministries and branches consider issues that are creating bottlenecks for the market and businesses such as credit and bond issuance. We highly appreciate the move of the Prime Minister, ministries, and branches. It will make fundamental changes to help the market recover and prosper again. The real estate market will not explode as before but will have stability for development.

In your opinion, what solutions are needed to remove difficulties for the market?

The real estate market is in dire need of handling and operating plans to remove the "bottlenecks".

The first is a matter of policy. Any project that brings to the market a suitable source of goods such as social housing needs to be adjusted for early approval. It is necessary to speed up the process of amending the Law, the content of the amendment needs to stick to reality.

If there are still problems, they need to be fixed. Do not rush to approve, especially the Law on Land.

While waiting for the Law to be revised, the Government may consider promulgating several special mechanisms to remove obstacles for localities in the handling of investment documents and procedures. The corporate bond market also needs to be promoted in a healthy and controlled direction as best as possible for effective capital mobilization of real estate enterprises.

In addition to corporate bonds, we need to develop investment funds, trust funds, and housing funds to provide capital for the market. In particular, it is necessary to simplify investment procedures, investor approval procedures, land allocation procedures, and compensation procedures.

For example, the current land price approval is an extremely big bottleneck that many localities face. It is necessary to have specific and clear regulations to create a basis for localities to handle issues.

If we can promote projects that are suitable for the market and sell out, it will help the market to have more transactions and reactivate real estate projects. At that time, many manufacturing industries supplying goods for the project will be restarted, removing difficulties for manufacturing enterprises.

How do you forecast the real estate market in 2023?

Along with the fact that the Government has issued many policies to remove obstacles such as setting up a Working Group to review, urge, and guide the removal of difficulties and obstacles in project implementation; issuing public notices to remove bottlenecks in the market; the State Bank of Vietnam has increased the credit quota for the whole banking system by 1.5-2%, thereby providing about VND200,000 billion in additional capital for the economy, the credit room is widened to help people with real housing needs buy houses; and those who can prove income, fully legal projects will have access to capital. These policies will "relieve pain" for the market.

It is forecasted that there are two possible scenarios for the real estate market in 2023. First, after the Lunar New Year, the Government will have some adjustment policies, the market will gradually warm up and stabilize until the end of the year. Second, the real estate market in 2023 will be difficult because the capital flow has not been cleared.

In my opinion, the market is likely to happen according to the first scenario. In the first quarter of 2023, Vietnam's real estate market will come out of recession, but still be quiet, due to coinciding with the Lunar New Year 2023. Market supply is limited because the process of preparing and implementing project legal procedures requires more time.

In the second and third quarters of 2023, the real estate market will gradually recover, and develop healthier, more transparent, and more standardized thanks to advances in the legal environment, positive economic growth prospects along with the growth momentum of trade, investment, and consumption activities, and the above problems have been gradually removed.

To adapt, real estate enterprises need to actively restructure products in developing projects to better suit market needs. Simultaneously, focus on developing more affordable real estate products in new projects, then the market will have better circulation and liquidity.

In the future, businesses need to choose and actively apply digital transformation to production and business activities; provide information and data about the market, help the real estate market to be transparent, develop sustainably, and strengthen investors' confidence.

Thank you, Sir!

By Hoai Anh (record)/ Ha Thanh

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