Interest rates cool down, real estate market officially welcomes investment wave in quarter 3

Market recovers strongly due to good policies

After a series of drastic instructions since the end of 2022, recently on May 25, Deputy Prime Minister Tran Hong Ha signed and issued Official Dispatch 469/CD-TTg on removing obstacles and promoting the safe, healthy and sustainable development of the real estate market. The Official Dispatch requires ministries, branches and localities to consider this an urgent and important task that needs to be focused on resolving according to the principle that the problem falls under the authority of which level must be resolved. Ministries and branches focus on guiding localities on regulations in their fields to resolve current problems, not answering evasively.

Continuously decreasing bank interest rates will be a "lever" to promote real estate market development.

Along with a series of urgent dispatches from the Government, the State Bank has also continuously lowered the interest rate ceiling to support economic growth recovery. Accordingly, the State Bank announced a further reduction in a series of operating interest rates effective from May 25. Since the beginning of 2023, this is the third reduction.

Accordingly, for deposits with terms from 1 month to less than 6 months, the maximum interest rate applied will be reduced from 5.5%/year to 5%/year. In addition, the refinancing interest rate will be reduced from 5.5%/year to 5%/year. The cooling interest rate also causes real estate loan interest rates of a series of banks to decrease sharply compared to 2022.

According to real estate experts, the market is being strongly supported by a series of good policies. In particular, not only short-term measures such as the Prime Minister's urgent telegram or interest rate reduction, but also long-term policies for real estate are also being considered. Specifically, in the National Assembly session this June, legal bottlenecks of the Housing Law, Real Estate Business Law, and Land Law are being discussed to amend the Law, creating a clear corridor for real estate development.

Preparing for a new real estate recovery cycle

With the Government's determination, the real estate market has gradually warmed up again since May. While investors have been busy looking for new products, real estate floors have started training sales again, many real estate businesses have also been bustling to start projects, kick-off sales to prepare for a new cycle of real estate recovery.

One of the notable major events to welcome the recovery of the real estate market is the groundbreaking ceremony of the Eco Central Park metropolis organized by the founder of Ecopark (Nghe An) and Ricons Construction Joint Stock Company. With a scale of nearly 200 hectares right in Vinh city, this is the largest project in the Central region to start construction in 2023.

Actual images at Eco Central Park project of Ecopark Founder.

After the groundbreaking ceremony, contractor Ricons is accelerating the construction of the first subdivision to bring the project on schedule. When the Eco Central Park model villa and Swan Lake Park were officially opened, the project breathed new life into the project, continuing to affirm its position as the center of the real estate market not only in Nghe An but also covering a wide area in the Central and Northern regions. The mega project has attracted the attention of many investors.

Following the Eco Central Park project in the heart of the Central region, a project in Hanoi is also expected to start construction this year, the Nhat Tan - Noi Bai axis project worth more than 4 billion USD. Specifically, during a working session with Chairman of the Hanoi People's Committee Tran Sy Thanh, Japanese Ambassador to Vietnam - Yamada Takio expected that the Smart City project in the North of Hanoi will soon start construction in 2023, becoming a symbol of cooperation between Vietnam and Japan, at the same time the two countries celebrate the 50th anniversary of establishing diplomatic relations.

According to actual records, in addition to these major projects, investors across the North, Central and South are also urgently planning to launch projects, kick off sales and simultaneously start many new projects. In particular, the common point of most projects that can be implemented at this time is that they have good legal status, prime locations and are developed by reputable investors with good financial health.

Dr. Nguyen Van Dinh - Vice President of Vietnam Real Estate Association - President of Vietnam Real Estate Brokers Association.

Talking to us, Mr. Nguyen Van Dinh - Chairman of the Vietnam Association of Real Estate Brokers (VARS) said that the real estate market is showing positive signs when synchronously implementing solutions through many legal documents. Many businesses ensure their "health" status through restructuring, aligning and implementing projects for quick transfer and easier absorption.

"In the second quarter of 2023, the Government will focus on amending and handling problems related to investment procedures for housing projects including social housing projects, worker accommodation, renovation of old apartment buildings... From here, the heat will spread to other segments of the market, break the ice and help the market recover. And the real estate market can recover from the third and fourth quarters of this year" - Mr. Dinh said.

Sharing the same view with Mr. Dinh, Associate Professor, Dr. Tran Dinh Thien - Chairman of the Scientific Council of the Vietnam Economic Institute and member of the Prime Minister's Advisory Group said that the Government has currently had many solutions to support businesses in extending the deadline for paying VAT, corporate income tax, reducing land rents, etc. And real estate is also expected to receive a credit package to support the development of social housing projects and housing for workers. "With those drastic moves, in the near future, policies on social housing development will be implemented quickly. It is forecasted that the market will soon recover in the third quarter of 2023" - Dr. Thien predicted.