3 expectations for the real estate market
Amending Decree 64, focusing on social housing, and reducing interest rates are things businesses expect the Government to do to ease market difficulties.
Mirae Asset Securities Joint Stock Company's real estate industry report acknowledged that the Government is actively seeking a way out for the real estate market. Currently, this market is facing many challenges when credit is tightened, bond mobilization channels are controlled, and interest rates are high. Accordingly, Mirae Asset experts expect 3 factors that, if implemented, can help the market somewhat ease its difficulties.
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View of Vinh city. Photo: Document |
Firstly, Decree 65 will be approved for amendment, helping to open up capital sources for businesses from the third quarter. Experts and businesses believe that Decree 65 is tightening, not suitable for the context, making it difficult for businesses to issue bonds as well as meet requirements on credit ratings, collateral, etc.
Recently, the Ministry of Finance has submitted to the Government a draft amendment with many proposals such as: Postponing the implementation of regulations on determining the status of professional securities investors and regulations on mandatory credit ratings by 1 year, instead of applying immediately.
The Ministry also proposed allowing businesses to extend the bond repayment period but not more than 2 years from the originally announced term. In 2023, about VND309,000 billion of bonds will mature, of which, real estate bonds alone need to mature at VND119,000 billion, according to data from the Vietnam Bond Market Association.
Mr. Le Hoang Chau - Chairman of the Ho Chi Minh City Real Estate Association, assessed that the draft amendment to Decree 65, if approved by the Government soon, will be a timely solution for bonds to continue to be an important capital channel, supporting the real estate market to recover and develop in a safe direction. Dr. Dinh The Hien also acknowledged that the amended Decree, if approved, will create room, allowing issuers, especially real estate enterprises, banks, and securities companies, to have more time to handle bond issues.
Second, social housing will be given more attention in the future. Social housing is considered a solution to break the ice at this time when it simultaneously solves real needs and helps the market overcome the crisis. However, for a long time, the social housing segment has encountered difficulties due to procedural problems and lengthy processes while the profits are very low compared to commercial housing projects.
To help the market balance and meet people's housing needs, the Government is aiming to build more than 1 million social houses by 2030; introducing many policies to encourage low-income people such as supporting 2% interest rates for houses under 2 billion; amending the Housing Law to tighten regulations on secondary transactions of social houses, and at the same time stipulating that localities must allocate land funds for this type of house when planning. The stages of bidding, land auctions, and procedures for determining selling prices for low-income people are being reformed to be faster.
Recently, the Ministry of Construction proposed a credit package of 110,000 billion VND for social housing; the State Bank also announced that there will be a package of 120,000 billion VND with interest rates 1.5-2% lower than the current interest rates for this type of housing.
Assessing the impact, Yuanta Vietnam Securities Company believes that the above credit packages can create momentum to revive the market. Enterprises with large land funds for social housing (for example Hoang Quan Real Estate) will benefit. However, this unit also recognizes that administrative procedures for project development are still a matter of concern and developers may continue to face difficulties in arranging capital for new projects.
Yuanta also believes that industrial park developers who own land for worker housing will also benefit in the long term. Although worker housing accounts for a small proportion of the total net asset value of these enterprises, market sentiment has become positive due to new policies, which could potentially boost stock prices. Moreover, the construction of worker housing in industrial parks is likely to increase the attractiveness of tenants and thus support core business activities.
Some businesses also consider the upcoming separate credit package for social housing as good news. For example, the VND120,000 billion package, although the interest rate is not high, still has a positive effect on the psychology of investors and home buyers in the context of sharply increasing lending interest rates and limited credit for real estate. However, what businesses are interested in at this time is the implementation method to make it easier for borrowers to access and disburse. In addition, businesses also propose that policies and laws for social housing continue to be promptly resolved, helping the project to be implemented soon.
Third, another expectation of businesses is that interest rates will not increase this year or if they do, they will only increase by 1%.
Currently, many banks have reduced deposit interest rates by 0.3-1% per year, bringing the average mobilization interest rate down by 1-2% per year compared to last year, fluctuating between 8.7-9% per year. The decrease in input interest rates and the abundant amount of deposits are creating conditions for banks to lower lending interest rates. Previously, after the State Bank's meeting on credit for the real estate market, Vietcombank's leaders said that commercial banks had met and agreed to lower mobilization interest rates, thereby creating a basis to reduce lending interest rates for businesses.
Previously, the rapid increase in interest rates caused many difficulties for the market, forcing those who wanted to buy a house to postpone their plans. Therefore, when interest rates show signs of cooling down, it will help promote market liquidity, reducing interest pressure for both home buyers and businesses.
Previously, DSC Securities acknowledged that this year the market faced many difficulties but created opportunities for large enterprises with good financial health to acquire low-cost projects. "If it is possible to acquire low-cost projects and preserve yields, this will be the driving force for enterprises to grow strongly in the next real estate wave," DSC said.
This unit recommends that businesses should buy, sell, and merge cheap projects in the second and third quarters when the pressure on bond maturity is strongest. In addition, DSC experts also predict that by the end of this year, when cash flow shows signs of easing, there will be a recovery potential for businesses.