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The land development again may occur in the period from 2025 to 2026 according to VNDirect

1509-2023

The land development again may occur in the period from 2025 to 2026 according to VNDirect

VNDirect experts said that in recent times, interest rates have decreased, which has helped the market gradually "defrost". At the same time, this unit also made a prediction that, according to historical cycles, land development again could take place in the period 2025-2026.

Interest rates have decreased, which has helped the market gradually "defrost"

In the latest residential real estate industry report, VNDirect Securities Joint Stock Company (stock code: VND) stated that bottlenecks are being resolved drastically. According to the analysis team, three bottlenecks need to be resolved synchronously to support the recovery of the real estate market including: capital channels, legal issues and rebalancing the supply and demand balance in the real estate market.

VNDirect believes that liquidity is still at a high risk level, but the most difficult period has passed.

Real estate businesses proactively bought back corporate bonds worth VND 12,561 billion before maturity. It helps the value of bonds maturing in the second half of 2023 and 2024 decrease by 12% and 10%, respectively, compared to before the buyback. Thereby, bond maturity pressure has decreased although the pressure is still high, especially for real estate businesses that are having cash flow difficulties.

In the first 6 months of 2023, the risk of insolvency of real estate businesses has decreased slightly when businesses extended bond maturity dates and extended bank debt according to Decree No. 08/2023. /ND-CP and Resolution No. 33/2023/NQ-CP. However, the liquidity issue is still a concern as many businesses are still slow to pay bond interest and principal. The cause was difficulties in refinancing channels and a sharp decline in sales due to market psychology.

Besides, falling interest rates help the market gradually "defrost". The pressure on interest costs of real estate development enterprises has somewhat cooled down. 12-month term deposit interest rates of commercial banks continued to decrease by 20 basis points in July 2023. It ranges from 6.0%-7.0%/year, which can reduce interest pressure on floating-rate loans for real estate development enterprises. VNDirect believes that the real estate market will gradually warm up again when home loan interest rates decrease to 10-11%.

In Ho Chi Minh City alone, the city aims to legally clear 50 real estate projects in 2023. The city currently has 156 projects developed by 121 investors who is waiting for problems to be resolved (of which about 70% are related to legal issues). When the legal barriers of the above projects are removed, Ho Chi Minh City is expected to have about 4,000-5,000 apartments opened for sale, helping to reduce the current supply pressure.

Regulators are trying to rebalance supply and demand in the residential real estate market during this time. There is an imbalance between supply and demand in the market today, mainly in the high-end segment, while the affordable and mid-range segments lack supply.

In addition to the preferential credit package for social housing projects, the government has committed to building more than 1 million social housing units and houses for workers by 2030. The goal is to meet the needs of people with low income.

When will the land return?

VNDirect predicts that housing will remain subdued in 2024 and the recovery will be clearer in the second half of 2024 when monetary policy is loosened.

In addition, this unit pointed out that there is a big difference between the present time and the period from 2011 to 2012. Currently, project supply is very limited and demand is still waiting at a high level while The market had excess supply and high inflation in the past

VNDirect also forecasts that the real estate market's return may take place in the period 2025-2026.

Thanh Phong

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