Updated Information of Real Estate Market in Vietnam in 2017

The 2016 Vietnam real estate market is considered to be more stable with higher total transaction capital than last year, this is a good motivation for the development of the 2017 housing market. However, there are many concerns about the market is not headed in the right direction with the high supply of the high price average housing and  while the resource of social housing and low cost housing is still very low.

Has the real estate market returned to the right trajectory, reflecting the true nature of supply and demand?

In 2015, we had seen the prosperity of the real estate market thanks to the social housing, low priced housing segment but 2016 was the best time for average and high-priced housing, especially resort style apartment.

This shows us that the housing market has been vibrant again and the confidence in the market is being recovered. However, the market is developing in the wrong direction while the supply resource of middle and high ranking segments takes 80% but the demand is just 20% and the supply of low-priced housing takes 20% but the demand is up to 80%.

Why is there such a big difference and what we need to do to balance the real estate market?

Recently, the development of social housing sector is still facing difficulty in mobilizing capital because this kind of investment  capital requires low interest rate, long term loan cycle, medium term capital is not able to solve the problem.

The development of social housing always need the government’s assistance of land, tax, credit budget, for example the 30.000 billion VND housing loans support package has been finished.

However, upto this time, we have not seen any similar credit package, which will impact the social housing segment.

Therefore, the development of social housing is not appropriate in the current context, while government’s budget is still limited.

Instead of that, we should concentrate on developing low-priced commercial housing, the investors who have demand will invest their own funds, the government will only support partially.

Nowadays, the low-priced commercial housing enjoys some preferential credit, exemptions on certain taxes.

However, this kind of development requires reformulating policy, this means there is a need for a centralized policy, which will be stipulated in the Housing Law and not only dependent on government decisions in each period as today.

If there is a clear and stable policy, the businesses will bravely invest in developing cheap social housing, all the projects are fairly treated, then all the commercial houses will be sold with transparent price and people will benefit from that.

Real estate market prediction for 2017

In 2017, the property is expected to be better, the ability to buy houses as a speculation, it will create some heat in several sector but there is no concern about the risk of  “balloon” in the housing market.

According to current trend, the segment of tourism property will strongly grow with the presence of small investors and people thanks to the huge tourism potential.

However, the low-priced housing segment will still lead the property market thanks to the high demand.

Unfortunately, the growth in the quantity of low-priced social housing will remain sluggish in 2017, which make it quite far from being able to exceed the ratio of 20% market share to meet the current demand.

Based on the projects, that have been implemented in Hanoi, the supply resource of high-priced property will be higher than the supply resource of median-priced property.

In Ho Chi Minh, the supply of low-cost housing is 20% but the supply of median priced housing will lead the market with 50% and luxury properties is just 30%. I hope there will be a new policy soon, which can solve the problems of cheap commercial housing so that the investors no longer to find ways to deal ­with the government’s subsidized support.