Hanoi (VNS/VNA) -🤡 Interest rates for home loans are expected to be kept ata low level next year to stimulate demand for real estate, which coupled withmacro-economic recovery and an increase in supply is hoped to promote thehousing market's development, according to a report from the securities companyVNDirect.

Since theoutbreak of the COVID-19 pandemic in January, the State Bank of Vietnam (SBV)has slashed rates three times, in March, May and October to aid economicrecovery, which helped ease the pressure of provision cost for banks andinterest expenses for customers and enabled lenders to introduce stimuluspackages for home purchases. Accordingto Tran Khanh Hien, deputy head of Investment Analysis at VNDirect, therate for home loans was reduced by about 1.8 percentage points to 9.5 percent,the lowest rate in the past decade. VNDirectalso predicted a robust recovery of the housing market next year fuelled by thecountry’s macro-economic recovery. Theglobal production shift expected to drive investment flow into Vietnamwill benefit the real estate market, especially industrial property. TheGovernment’s efforts to hasten public investment disbursement with a focus oninfrastructure development have also aided the real estate market. Thereport also forecast that new supply will skyrocket due to the expectation thatthe amendments to the Law on Construction and the Law on Investment 2020 whichtake effect from the beginning of next year will tackle legal bottlenecks. With anumber of projects set to resume construction in 2021, VNDirect forecastnew supply in HCM City will increase by 10-15 percent to reach 17,000apartments. In Hanoi,the supply is predicted to increase by 50-60 percent in 2021 to reach 23,000apartments, mainly from mega-projects like Vinhomes Smart City, Vinhomes Oceanpark, Sunshine Empire and Gamuda City. Regardinghousing prices, VNDirect said that the trend is to rise, driven by improveddemand and low-interest home loans. Still,there will be no market bubble in the short term, VNDirect stressed. The marketis now different from 2009-10 when inventories were high and prices wereinflated, leading to the market collapse in 2013.   Now, themarket has limited supply and high demand while the cash flow continues tobe pumped in the market. Vietnam’sreal estate market has a cycle of seven years and the market could enter astrong growth period in 2021 if legal bottlenecks are tackled properly,VNDirect said. TheM&A activities are predicted to be robust next year as a number of smalldevelopers have fallen into difficulties due to the legal bottlenecks andimpacts of the COVID-19 pandemic, creating opportunities for those withfinancial capacity./.