Vietnam's property market to stay in slump till late 2024

HANOI (Xinhua): Vietnam's property market is expected to stay faltered throughout next year despite a slew of measures by the government to boost market sentiment, local Vietnam News newspaper reported on Monday (March 13).

The property market would not rebound until the end of 2024 as real estate developers still face financing pressure due to a tightening of credit supply from the banking system and restrictions on issuance of corporate bonds, said Nguyen Quoc Hiep, chairman of the Vietnam Association of Construction Contractors.

It is estimated that about 289.82 trillion Vietnamese dong (US$12.2 billion) in corporate bonds is scheduled to mature this year, according to the Vietnam Bond Market Association.

Given a liquidity crunch, higher interest rates and stricter rules on private placement bonds, property developers have struggled to ease their stifling funding squeeze, weighing on their ability to meet bond obligations.

According to the Hanoi Stock Exchange, as of the beginning of March, at least 10 property developers were seeking a delay in redeeming bonds or paying interest due to their constraining cash flow.

Authorities have recently allowed issuers to extend payments by a maximum two years so that they would have more time to negotiate with bondholders on payment delay or exchange the bonds for other assets.

The latest attempt by the government may prevent a market collapse, said Nguyen Quoc Hiep, adding that there are still concerns over the rights and benefits of bondholders, hence dampening market confidence.

The real estate market has contracted since 2022 as the property sector grapples with a debt crisis leading to dwindling investments from developers and home buyers.

In 2022, the number of newly-licensed housing projects plummeted 90 per cent, existing development projects halved and completed property projects plunged 81 per cent from the year before, according to the Ministry of Construction.

The market has faced unprecedented problems in the past five years with a large inventory and a sharp drop in liquidity, said Nguyen Van Dinh, deputy chairman of the Vietnam Real Estate Association, adding that the market has seen an imbalance between supply and demand with an oversupply in the high-end segment but an acute shortage of affordable housing products.