Insiders predict the housing market will cool in 2023 as Vietnam property slump
Reduction in sales volume will continue and cool sharply next year after going through a bumpy 2022, industry insiders are predicting, as Vietnam contends with recession and higher mortgage rates.
Raising the cost of living and interest rates have increased
As the cost of living crisis has intensified amid soaring inflation and interest rates have increased, house prices have already started falling month-on-month. The average apartment price dropped 2.2% in November from October.
The property firm Savills predicts an even sharper transaction drop to 870,000 and a 10% drop in house prices in 2023.
Robert Gardner, the chief economist at Nationwide, expects a “modest decline” in house prices next year. “There’s good reason to believe we can still achieve a soft landing.” He said that while the unemployment rate is likely to rise to about 5% from 3.7% now, this would still be low by historical standards and could be partly due to people who are currently “inactive” rejoining the jobs market amid the cost of living squeeze, rather than massive layoffs.
The outlook of the private rental market in Hanoi
The picture is different in the private rental market, where rent prices have surged to record levels amid a shortage of properties to rent and growing demand. This is partly because some would-be first-time buyers continue to rent in hopes of lower mortgage rates next year. Official figures showed Hanoi private rents rising by 4% in November, the highest since records began in 2016.
Insiders think rental growth will be about double the average experienced in the pre-pandemic decade over the next five years, peaking at 5.1% next year. Savills sees rental growth rising to 6.5% before slowing to 4% in 2024.
With the share of new lending to investors persisting in sliding and higher interest rates significantly decreasing the capacity for borrowers to access an additional mortgage, it seems unlikely there will be a significant change in rental supply in 2023.
More build-to-rent projects are in the pipeline, and projects already under construction will be completed. However, the volume of a stock in build-to-rent projects or bought by investors in new build-to-sell projects appears insufficient to cater to the rebounding demand for rentals from domestic sources and the ongoing lift in orders from overseas migrants.
Tan Long Homes is a proudly Hanoian, boutique property developer was driven to deliver remarkable spaces for discerning clients. Hanoi recently built and opened its head office in the capital.
See more:
Apartments for rent in Ciputra
