Property trading in Ho Chi Minh City saw a decline of 11.6% in the first and second quarters of this year compared to the same period last year, as reported by the city’s Department of Construction. The establishment of real estate brokerages also halved. Only 689 being set up in the first half of the year. Delays and complexities in approval procedures have contributed to housing shortages, particularly in the social and affordable housing sectors.
The city faced sluggish demand, resulting in cash flow shortages for housing companies. Some companies resorted to drastic measures, like cutting selling prices in half to stimulate sales. Many businesses in the industry are grappling with financial difficulties. A housing development company based in Binh Thanh District disclosed that it has encountered zero revenue for the past year. It also reported that it had accumulated significant debts and experiencing negative growth since Q2 of 2022. The chairman had to put up personal assets to secure loans for debt repayment.
Another company located in District 3 underwent a similar predicament and began reducing prices in 2022 to entice buyers. The Ho Chi Minh City Real Estate Association emphasized that easier access to bank loans could be a lifeline for real estate businesses.
Not expect rebound in housing until 2024
Vo Hong Thang, Deputy Director of R&D at real estate consultancy DKRA Vietnam, projected that housing intended for owner occupation at prices below VND50 million ($2,111) per square meter, along with social housing for low-income individuals, might witness recovery by 2024. However, properties purchased solely for investment purposes might not experience the same rebound.
Thang identified three critical factors influencing recovery. These are, firstly, economic rebound. Secondly, the resolution of legal obstacles hampering real estate development. And third and finally, he mentioned improved access to bank loans accompanied by interest rate decreases below 9%. He suggested that lowering deposit and lending interest rates could potentially lead to an increase in demand for land and housing. This shift might take place during the third and fourth quarters, which typically represent the peak season for the sector.