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Overview of Vietnam’s real estate industry 2022

Overview of Vietnam’s real estate industry 2022

Saturday 15, 10 2022
Vietnam’s real estate market is going through a period of rebalancing in the last 6 months of the year. House prices will increase in line with rising costs, inflation, high housing demand and low supply.

Vietnam’s real estate market in 2021

In the first half of 2021, Vietnam suffered from heavy Covid-19 outbreak which seriously affected people's daily and working lives. However, real estate prices did not decrease, and the industry still achieved remarkable results:

Vietnamcredit - real estate prices

  • In 2020, FDI continued to pour into Vietnam with a figure of nearly $29 billion, $3.8 billion of which was poured into the real estate industry.
  • Experts also assessed that 2021 was a favorable year for real estate in all aspects.
  • Credit was very “generous” to the real estate market when there was a commitment to disburse up to VND 157 billion in 4 months.
  • Policies to disburse for infrastructure projects were promoted.

Real estate market trends in the second half of 2022

In the first 6 months of 2022, the real estate market witnessed a liquidity jam. Accordingly, the three main financial and monetary impulses into real estate were strictly controlled.

Firstly, in terms of credit, according to statistics of the State Bank of Vietnam, as of May 31, the outstanding credit balance for the real estate sector was VND 2.33 million billion, accounting for 20.66% of the total credit outstanding to the economy.

Vietnamcredit - real estate market

Outstanding credit in the real estate sector, mainly for private purposes, was VND 1.55 million billion, up 14.41%, accounting for 66.3%. Outstanding credit for real estate business was more than VND 786 trillion, accounting for 33.7%.

Secondly, as for corporate bonds, after a few scandals on the market, corporate bonds in real estate were tightened. Generally, in the first 6 months of the year, the scale of corporate bond issuance reached over VND 180,000 billion, down nearly 27% over the same period last year.

Notably, the issuance of corporate bonds in the second quarter continued to decline when the total number of issuances was only 16, down 63% compared to the first quarter, corresponding to a value of nearly VND 8,600 billion, down 79% over the previous quarter.

Thirdly, it is about real estate tax. Statistics of the General Department of Taxation shows that in 2021, personal income tax revenue from real estate transfer reached VND 21,000 billion, an increase of more than VND 4.9 trillion (30% increase) compared to 2020.

In 2022, personal income tax revenue from real estate transfer in the first months of the year reached VND 16.6 trillion, up 73% over the same period in 2021. According to some statistics, real estate prices in some segments and certain areas are currently 20-25 times higher than people's income and this figure may continue to increase in the near future.

From these factors and a number of other impacts, it can be seen that there has been a slow down in the number of real estate transactions.

Vietnamcredit - mobilization channels

From a business perspective, investors are likely to face many difficulties related to arranging capital and mobilizing resources to develop projects, thereby, affecting the implementation progress. They might have to approach other mobilization channels in the capital market with higher costs, posing the risk of "eroding" profits.

Faced with these difficulties and challenges, businesses will need to have flexible improvisation moves to adapt to the current market conditions.

According to Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, the supply and transactions of residential real estate in projects in the first 6 months of 2022 reached more than 22,700 products, and approximately 11,500 products were under transaction.

In the last 6 months of the year, Mr. Nguyen Van Dinh said that the real estate market is going through a period of rebalancing. House prices will be under upward pressure as rising costs, inflation, high housing demand and low supply continue to drive up costs.

"Liquidity will decrease. Investors also tend to let cash flow rest and become more cautious," said the chairman of the Vietnam Real Estate Brokers Association.

Source: SBV, General Department of Taxation, Vietnam Real Estate Brokers Association

Compiled by VietnamCredit

 

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