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Predicting risk by real estate experts from now until 2024

3009-2023

Predicting risk by real estate experts from now until 2024

According to Dr. Can Van Luc, the current period is a period of purification and crisis of faith. However, from now until 2024, the real estate market will have risks to face.

The market is not in crisis

At the 1st Fall Real Estate Forum: The content is forecasting the market's recovery time and investment recommendations. Dr. Can Van Luc, Chief Economist of BIDV a member of the National Financial and Monetary Policy Advisory Council, said that the current real estate market is not in crisis but this is a common difficulty of the world. If there is, it is only a crisis of "confidence", not of "the market".

According to Mr. Luc, this is a reasonable time to discuss the issue of market recovery because facilities have gradually appeared.

Specifically, in terms of macroeconomics, the world and Vietnamese economies are showing signs of recovery, and 2024 - 2025 will be better.

Inflation and interest rates are no longer increasing and are gradually decreasing. As of August, inflation has maintained a level of 4.57%. As of September 1, the overnight interest rate decreased nearly as much as at the beginning of 2021, below 1%; The rediscount interest rate is 3%; the Refinancing interest rate is 4.5%.

Besides, legal and institutional problems are also gradually being resolved. Planning at local levels is being completed. Public investment and infrastructure development have been promoted. Public investment disbursement reached more than 352 trillion VND in the first 8 months of the year.

At the same time, financial obligations are under control, and access to capital is maintained. Finally, supply and demand decrease, and prices are more balanced and appropriate.

"I affirm that this is not a period of crisis, but this is a period of purification," Mr. Luc emphasized.

According to international organizations, this year's economy will be difficult, but next year will improve. Vietnam's economy is growing very well, forecast to grow from 5-5.5%, next year forecast to be about 6.5%.

“This is the most normal level when we quantify new growth drivers in a meeting with the National Assembly. If this activity goes well, we can grow by 0.4 to 0.7 percentage points each year.

We forecast that the economy will grow nearly 6% in the third quarter of this year, and about 7.5% in the fourth quarter. It's clear that Vietnam is recovering better in the next quarter than in the previous quarter, similarly, China and other Asian countries are also on a good growth path. Only with the exception of the US, after the second quarter, the US economy in the third quarter began to deteriorate because interest rates were still high. The FED itself also made adjustments although they are still determined to maintain tight monetary policy," Mr. Luc said.

Currently, global inflation has been decreasing by an average of 8.4%. It is forecast that by the end of this year, it will be 5 - 5.5%. By the end of 2024, it will be 3 - 3.5%.

According to this expert, in Vietnam, the inflation rate has been gradually decreasing, although October may increase slightly. Causes of some seasonal factors such as energy, food, and food prices. However, the main trend is down, so it creates favorable conditions for banks to operate loose monetary policy.

Risks are still waiting

Mr. Luc assessed that operating interest rates are moving sideways. It is forecast to start decreasing in the third quarter of 2024 in Asian and European countries. Vietnam's operating interest rates have been decreasing by 2% in the past 4 months. Interbank interest rates have been falling relatively low. This proves that bank liquidity is relatively abundant, attracting money to regulate the market.

“Money supply began to increase again from March 2023 until now, and compared to the same period last year increased by over 6%. When the cash turnover is faster, it will promote better capital for businesses and people," Mr. Luc said.

Regarding the policy mechanism, monetary policy is shifting from "tight and firm" to "flexible and loose". The State Bank has also reduced operating interest rates four times. In addition, many policies to support businesses and people are implemented such as debt restructuring, debt rollover...

According to Mr. Luc, these are unprecedented policies for the financial and real estate markets. We have never had the opportunity to amend so many laws at the same time as we do now with the Land Law, Housing Law, Real Estate Business Law, Credit Institutions Law, Auction Law, and Bidding Law.

In particular, fiscal policy continues to expand, defer taxes, and reduce fees to support people and businesses.

“We estimate the total value of all fiscal packages to have a nominal value of about 200 trillion, a real value of about 70-80 trillion. Currently, we clearly have many very drastic support policies for the market," he said.

The capital flow into real estate is still flowing steadily. Credit for real estate still increased by nearly 5%, nearly equivalent to the increase for the entire economic system. Consumer credit increased by 18%; Housing credit growth is low, even decreasing. This proves that real demand is decreasing due to falling income, high-interest rates, and people being more cautious.

Real estate businesses started issuing bonds again. Issuance value decreased less than the same period last year. In the first 8 months of this year, the entire market issued about 132 trillion. a decrease of about 44% over the same period last year, lower than the decrease of last year (47%).

There are many signs of recovery. However, this expert predicts that in 2023 - 2024, the real estate market will still face challenging risks.

Firstly, challenges originating from outside are still very clear such as weak demand and reduced growth momentum; inflation, energy prices, high interest rates; and High financial and monetary risks. These things negatively impact exports, investment, and tourism in Vietnam.

Secondly, financial risks related to exchange rates and securities become more sensitive than before. Slow credit growth shows that demand is weak, unable to meet credit conditions, and credit is declining.

Thirdly, public investment increased well but clearly, there was no breakthrough.

Fourthly, businesses still face many difficulties, especially restructuring (legal, financial, human resources, orders...).

Fifthly, bonds and real estate are recovering but it takes time and cannot recover quickly. The important factor is investor confidence, but its recovery is still slow.

Sixth, despite active implementation, Mr. Luc said that the process of institutional reform is still slow compared to needs.

From there, Mr. Luc said that we need to develop harmoniously supply and demand, prices, planning,...

At the same time, we need to focus on regulating supply and demand and real estate market prices. We also need to quickly resolve remaining problems and legal violations to regain investor confidence.

In addition, real estate markets are grouped to easily control supply management and regulate taxation appropriately.

In addition, it is necessary to improve institutions in the direction of amending the Land Law, Housing Law, Real Estate Business Law, Credit Institutions Law... on time and with quality. It also considers the plan to continue implementing Decree 65 (2022) from early 2024.

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