Experts expect positive outook for real estate market in 2021
30/12/2020 14:30 | Source: ThanhnienViet
In 2020, the Vietnam’s real estate market faces dual difficulties: the Covid-19 pandemic and the scarcity of supply. However, experts forecast the market in 2021 will see many bright spots.

One of the major bottlenecks of the domestic real estate market in 2019 is the tightening of project licensing by authorities, making a sharp decline of new housing supply. This challenge is clearly seen in the country’s major markets. In Ho Chi Minh City, only 2 projects have been granted new investment policies and 30 projects have had construction permits in 2019. Meanwhile, Hanoi market had only over 25 projects.

According to the Vietnam Real Estate Association (VNREA), in Jan-Sep 2020, only more than 20,000 new products were launched onto the market. In comparison to 2019, this figure only reached over 35%, and to 2018, it reached only 20%.

The gap between supply and demand has pushed the market into consequences such as rising house prices and "land fever" in some areas. Apartment prices on the primary market in Hanoi still recorded an average increase of 5% in launches. Meanwhile, HCMC apartment prices in Quarter 3 - 2020 increased sharply by 15-20% quarter-on-quarter.

Nguyen Manh Ha, Vice Chairman of VNREA said, the slow approval of projects in recent years is due to the legal overlap in the laws. The reason that authorities are prudent in approving projects is to ensure the transparency and healthyness of the market.

However, there have been positive signs of removing this bottleneck. In Q4 2020, the Government made a move against the above situation. Specifically, Resolution 164 resolves investment problems in urban areas; the revised Investment Law, effective on January 1, 2021, will largely remove legal problems for the real estate market. This resolution is expected to bring a fresh air to the market with new opportunities for development.

Sharing the same viewpoint, Bui Van Doanh, Director of the Vietnam Real Estate Research Institute, also said in 2021, when entering a new term, many projects to amend the law are expected to be completed. This means that problems on legal policies in some segments and types of properties will be removed. Therefore, the congestion points will be cleared, leading to the prosperity of business activities, project development.

In addition, many new policies to support the market as well as new legal documents that have been directed and researched by the Government are expected to solve problems of the market.

Doanh said in 2021, the thrust of the market is expected to come from capital flows through different channels. Recently, commercial banks are facing difficulties because they do not have borrowers, so deposit and lending rates have continuously decreased. When interest rates drop sharply, banks will inevitably choose a lending channel for real estate, because this is still an investment channel to ensure quite certain profits.