How will the new laws, once in effect, impact the real estate market? Below are the opinions and assessments from experts in the Vietnam Real Estate Market Report for Q2 and the first six months of 2024 by the Vietnam Association of Realtors (VARS).
The opinions of experts on the new land law
Assessing the impact of the real estate-related laws recently passed by the National Assembly, which will officially take effect from August 1, 2024, Associate Professor Dr. Trần Đình Thiên, a member of the Prime Minister’s Economic Advisory Group and former Director of the Vietnam Institute of Economics, believes that the new laws will undoubtedly have a positive impact, contributing to the recovery and development of the market. These laws were drafted in the context of a struggling market with the aim of thoroughly addressing these difficulties. In practice, the efforts to resolve bottlenecks and obstacles are reflected in the recently passed laws, and although they may not fully meet expectations, they will certainly have a positive effect.
Sharing this view, Dr. Cấn Văn Lực, Chief Economist at BIDV and Director of BIDV Training and Research Institute, highly appreciates the quality of the three newly passed laws. Accelerating the official effective date of these laws by 5 months ahead of schedule will positively contribute to the Vietnamese real estate market. This helps to quickly resolve the market’s difficulties and obstacles, especially regarding issues such as land valuation, land clearance, resettlement, and the implementation of social housing projects. Consequently, it will help promote the development of the market.
From an economic perspective, Dr. Võ Trí Thành, Director of the Institute for Brand and Competitiveness Strategy, believes that the early implementation of the real estate-related laws will accelerate the recovery of the real estate sector. This, in turn, will promote economic growth, as the real estate sector contributes 12-14% to GDP. Resolving difficulties in the real estate market is crucial for the overall economic recovery process.
“The three laws, once officially in effect, will establish a new legal framework, addressing most of the ‘bottlenecks’ in the market, as 70-80% of existing issues are due to legal constraints. This will also lay the foundation for the real estate market to develop in a safe, healthy, and sustainable manner. However, to ensure effective implementation, it is essential to expedite the completion of related decrees, ensuring they are of high quality and closely aligned with the market,” Dr. Thành emphasized.
Similarly, Dr. Nguyễn Minh Phong, former Deputy Director and Deputy Head of Propaganda and Theory, Senior Economic Editor, and Secretary of the Scientific Council at Nhân Dân newspaper, believes that the Land Law, Housing Law, and Real Estate Business Law play extremely important roles in the development of Vietnam’s real estate market. Among them, the Land Law is considered the foundation for the other two laws. Once the three laws take effect, they will help resolve legal issues and market difficulties, facilitate agreements between businesses and citizens regarding land clearance, and create a broader and more transparent playing field through new regulations.
However, there are two issues that need careful attention. Firstly, real estate prices may increase due to the new regulations that align land valuation with market prices. This will make it more difficult for people to access real estate. Secondly, there will certainly be new gaps and issues that need to be addressed.
What additional support is needed for the real estate market to truly stabilize and develop again?
According to Associate Professor Dr. Trần Đình Thiên, for Vietnam’s real estate market to truly stabilize and develop again, it is essential to focus on “unblocking” the market, particularly by unblocking both demand and supply. This means resolving the current supply and demand bottlenecks so that they can meet each other, allowing the market to “change its color.” There are several urgent tasks that need to be addressed:
- Firstly, institutional obstacles must be resolved quickly and definitively to avoid hindering the market’s recovery pace.
- Secondly, there needs to be better coordination among resources and proactive measures to create opportunities for real estate businesses and customers/investors to access capital under favorable interest rates that genuinely support growth and development.
- Thirdly, considering measures to improve minimum wages so that people have opportunities to increase their income, thereby boosting demand.
- Fourthly, continuing to implement measures to attract investment to maintain and stimulate the industrial, commercial, tourism, and resort real estate segments.
Most importantly, it is crucial to implement these solutions in a coherent manner. Any bottleneck that can be addressed should be resolved promptly to prevent a loss of momentum in market recovery. Facilitating capital flow into the real estate market is paramount in this regard.
Regarding the inadequate financial and monetary support policies as expected, especially for the economic and social development recovery programs, it is crucial to distribute resources fairly across business sectors, including real estate project investors and secondary investors in the real estate market.
Businesses need to strive for restructuring and develop affordable real estate that meets the needs of the people. The social housing segment requires a fresh perspective, focusing on its critical role in national infrastructure.
Lastly, to ensure that the recently passed laws truly have a positive impact on the Vietnamese real estate market, Dr. Nguyễn Minh Phong emphasizes the guidelines accompanying these laws must be of high “quality,” specific, and detailed. They should facilitate easy understanding and implementation for all parties involved. Functional agencies must comprehend these laws accurately for proper enforcement. Transparency and openness are essential throughout the implementation process. Continuing to solicit feedback from stakeholders to refine these laws is crucial for ensuring their effectiveness. Additionally, strict enforcement and timely handling of any misconduct are necessary.
Above all, reinforcing public trust, enhancing the attractiveness of real estate products, and improving support policies for the social housing segment are paramount.
