Vietnam’s real estate sector is set to undergo significant changes with the implementation of three newly-amended laws from August 1: the Land Law 2024, the Law on Housing 2023, and the Law on Real Estate Business 2023. These laws are expected to shape the future of the real estate market in the country, leading to a gradual and sustainable recovery with noticeable improvements and accelerated growth anticipated by the end of the year. However, challenges may still persist, making the recovery process uneven.
One of the key anticipated changes in the real estate market is the increase in supply of homes for sale. The Vietnam Association of Realtors (VARS) forecasts a 20 per cent rise in the supply of high-end and luxury apartments over the remainder of 2024. This increase in supply is expected to be accompanied by improvements in product quality and prices, as well as the entry of more low-rise units from large projects nearing completion.
Demand for residential housing is also expected to remain strong, with investment demand projected to recover by around 30 per cent. This increase in demand is likely to drive a 20 per cent rise in transaction volumes, particularly in the apartment segment. Additionally, liquidity in the secondary market is expected to improve, leading to an increase in viewings and purchases.
The market for villas, townhouses, and shophouses is also expected to see improvements, especially in the secondary market. Land plots, which have been moving away from price lows, are regaining their status as a preferred investment channel. Furthermore, the supply of resort property and condotels is expected to improve, with more companies launching new products, albeit in limited quantities.
The social housing segment is also expected to turn around, with new regulations aimed at easing challenges for businesses and buyers. A revised VND120 trillion credit package for social housing is expected to provide better terms, boosting the supply of affordable housing and controlling price surges.
While the newly-amended laws are expected to have a positive impact on the real estate market, challenges still remain. Rising real estate credit debt, issues with bonds and bad debts, and a mismatch between available products and market demand are some of the challenges that the market may face in the immediate future.
Many industry insiders believe that the new regulations will act as a „filter,“ eliminating less-competent market participants. The tightening of real estate brokerage practices and regulations on land funds for commercial housing projects are expected to weed out weaker investors lacking capacity or financial resources. This will create a playing field that favors well-organized investors with substantial land holdings and the capability to develop large-scale urban projects.
Overall, the future of Vietnam’s real estate market will depend on the effectiveness of the new legal regulations. Industry participants are hopeful that these laws will lead to a revitalized market with increased transparency and efficiency, ultimately benefiting both businesses and buyers.