According to DatXanh Services’ Vietnam real estate market research report, Vietnam’s real estate market can be summarized through 8 cycles.
1993-1994 was the first land fever period , when the US lifted the embargo and Vietnam joined ASEAN. The National Assembly passed the first Land Law and the Housing Ordinance, allowing the transfer of land use rights. This is also the beginning of the first real estate fever in Vietnam Economic growth peaked. Demand for residential and productive land increased, transactions boomed.
In the period 1995 – 1999, at this time, the real estate market was still young , the opening level of the economy was not high. The State issued two decrees, Decrees 18 and 87 on land lease, to prevent speculation and regulate the market. The wave of massive sell-off took place, causing the real estate market to be in a state of oversupply and plummeting. Besides, the Asian economic crisis originating from Thailand has caused a number of foreign real estate projects to invest in Vietnam to fail, contributing to the market downturn.
In the 2000-2002 period, the policy of allowing overseas Vietnamese to buy houses and issuing new land prices led to a sharp increase in housing prices and peaked in the second quarter of 2001. The Enterprise Law in 2000, the Foreign Investment Law in 2001 was born. The policy for overseas Vietnamese to buy houses and promulgate new land prices will have prospects for the housing market, so many people invest in buying land everywhere in the periphery.
In the period 2003 – 2006, “Law on Land 2003” and “Decree 181” with the regulation that “projects must be built before they can be sold” ended the situation of “subdivision of plots for sale”.
Since the end of 2003, the real estate market has been quiet, but prices have not fallen sharply because investment capital is mainly idle money of private individuals. Profits from real estate business dropped sharply, causing capital flows to shift to the stock market.
In the period 2007 – 2008, Vietnam officially joined the WTO, received a large investment wave after integration, high credit growth, and a flourishing stock market. The large surplus capital was transferred from the stock market to the real estate market.
Housing prices increased from 50-70%, even up to 100%. In 2007, the Law on Real Estate Business took effect, along with the introduction of legal corridors such as the Law on Real Estate Registration, the Law on Land Use Tax, the Law on Housing, and policies applicable to overseas Vietnamese buying houses. … help investors feel more secure when participating in the market. There has been a shift in investment in individual houses to real estate projects.
In the period of 2009 – 2013, affected by the global financial crisis in 2008 , Vietnam’s economy was in recession, inflation and bad debt increased rapidly (in the whole year 2009 increased by 19.89%), bank loan interest rates were very high (23-24%/year). The Government’s policy of tightening credit to control the real estate bubble and curb inflation caused the real estate market to be severely affected. Real estate prices plummeted on average 30-40%. Investors at this stage use high financial leverage.
In the period 2014 – 2018, the real estate market showed signs of recovery from the end of 2013 and developed stably: Transaction volume increased, inventory decreased, the structure of real estate goods shifted in a reasonable and suitable direction more in line with market needs.
In 2014, the Law on Real Estate Business was introduced to open up opportunities for foreigners to own houses in Vietnam. During this period, many new types of real estate appeared in the market such as officetel, condotel, shophouse,…
In 2018, the market experienced waves of land fever spreading in many areas across the country: virtual fever of land prices, agricultural land in Van Don, Bac Van Phong, Phu Quoc; Land prices increased sharply in the suburban districts of Ho Chi Minh City and then spread to the coastal provinces such as Dong Nai, Binh Duong, Long An and central provinces and cities such as Khanh Hoa, Binh Dinh, Da Nang, Nghe An, and Thanh Hóa …
In the period of 2019 – 2022, global geopolitical and economic instability. Land fever continues to break out in many localities: causing real estate prices in these places to rise. However, the fevers passed quickly, and the markets in these areas quickly fell into silence. The real estate market shows a decrease in both supply and number of transactions.
The reason is that the land fund in the central area is increasingly depleted; legal proceedings are delayed; the authorities review and suspend all illegal projects. The global pandemic of Covid-19 has had a strong impact on the economy and the real estate market. Supply continued to be scarce, trading was “quiet”, prices moved sideways. The government issued many policies to tighten credit and control inflation in a cautious manner.
However, because of the experience from previous crises, businesses, investors and customers all prepare their own plans to survive. The contexts of the two crises are also very different.
Specifically, inflation in 2008-2013 peaked at about 22%, while in 2022 it was 3.15% (below the target of 4%). Borrowing interest rates in the previous crisis peaked at 18-20%, while in December 2022, interest rates were 12-15% due to the image of policies being enacted to control interest rate cuts. The Law on Land, the Law on Housing, the Law on Real Estate Business… in the past there were many shortcomings, while at present, the legal system has been completed. Importantly, the period 2008 – 2013 was also an oversupply crisis when the real estate inventory was very large. Currently, the supply of real estate is scarce, especially for real demand.
Forecasting the market picture in 2023, DatXanh Services experts said that, although the post-Covid-19 world economy’s recovery is uneven and is facing many challenges, Vietnam is still one of the bright spot when the IMF forecasts economic growth of 6.2% in 2023.
Besides, Vietnam still has many prospects to become a new destination for global investment flows, considering the stable political situation with the flexible management policies of the State. Investment environment and quality of resources are continuously improved. Multilateral and flexible foreign policy in line with reality. The role and position of Vietnam in the region and the world is growing. Vietnam is also considered an attractive destination with potential from a large-scale consumer market. In particular, the domestic economy will benefit when the Trade Agreements come into effect.
Source: CafeF
Source: Vietnam Insider