Rough period could last until 2023
- Since 1986, after Vietnam had moved toward a market economy model, Vietnam's real estate market has experienced three strong growth periods, in both market size and selling price (1993-1996, 2007-2010) and experienced declines in the following years. These fluctuations was attributable to changes in land policies and monetary policy.
- We believe that the real estate market has entered the third booming period (2018 – 2021) thanks to the recovery of banking system after restructuring, expanding monetary policy and COVID-19 pandemic. However, the contraction period could have started from 2022, when (1) capital raising through bond market has been congested and (2) credit policy gradually shifted to strict regulation, especially real estate sector. According to data from the Ministry of Construction, in 3Q2022, most residential real estate activities showed signs of significantly slowing down compared to the same period last year. The number of licensed and eligible projects for sale decreased by 8% and 23% over the same period.
- In short term, we believe that macro-economics difficulties should not be resolved. In addition, if compared with previous cycles, it is expected that it will take two to three years for the real estate market to start a new recovery.
Land mania in 1993 – 1996: Policy shifts
After having moving to market economy in 1986, a year later the National Assembly promulgated the first Land Law in 1987. During the time when the 1987 land law was implemented, land was considered wholly owned and assigned to people, in order to manage, use but they were not have allowed to buy and sell. During this time, buying and selling land was strictly prohibited. According to the provisions of article 53, Land Law 1987, land trading activities would be sanctioned at one of the following levels: warning, a fine from 20% to 30% of the value of damage caused by the violation, and the highest level is confiscating all profits from selling lands and recovering the illegally used land
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