A market report released on June 6 by the Vietnam Association of Realtors (VARS) said 554 real estate companies exited the market in the first five months of the year, up 30.4% compared to the same period last year. The number of new entrants into the market also decreased by 61.4% compared to last year, totaling 1,744.

In the first quarter, real estate companies posted a 6.46% year-on-year decline in revenue, while their profit after tax plummeted by 38.6% compared to the same period last year.

The rising inventory buildup has compelled developers to suspend operations due to insufficient resources to complete half-done projects.

In its report, VARS describes the housing market as cash-starved, lackluster, and imbalanced.

In 2022, the housing market had about 48,500 housing units available for sale, representing over 20% of the number recorded in 2018, with the majority being luxury apartments. However, this figure dropped to 25,000 in the first quarter this year, primarily consisting of unsalable products from 2022, indicating a lack of new housing projects.

The abundance of high-end properties coupled with declining demand has resulted in a sharp decline in property transactions, reaching only 19,000 during this period, equivalent to 17% of the number of transactions in 2018.

A VARS survey found that over 90% of respondents reported lower revenue in the first quarter. Among them, 39% of respondents saw revenue falling 20% to 50%, while 61% reported a revenue drop of over 50% compared to the same period last year. Some companies with fewer than 100 employees saw revenue dipping 70-80%.

Unfavorable business conditions have forced companies to lay off workers. Data showed that over 95% of property firms nationwide had cut employment by the end of last year, with 50% of them terminating over 20% of their employees compared to the second quarter last year.

If the current situation persists, VARS predicted that 23% of the country’s real estate firms may pull out of the market by the end of the third quarter, and only 43% would be able to resume operations by the end of the year.

The woes faced by the real estate sector could have a domino effect on other industries and the overall economy due to the interconnected relationships between real estate, insurance, banking, and securities.

Source: Saigon Times