According to the Ministry of Construction, supply remained limited in all segments, with only 52 commercial housing projects with 16,000 units completed, less than half the number in 2022.
In the condotel segment there were 17 projects, down 44%.
Statistics from real estate consultancy CBRE Vietnam showed apartment supply was 40% down in both Hanoi and Ho Chi Minh City to 10,100 and 8,600 units.
As of the end of the third quarter the total number of transactions in the property market had been down 59% to only 324,700.
While the prices in low-rise housing and some other segments fell by 10-20%, those of apartments in the primary market bought to live in and not as an investment increased due to low supply, according to the ministry.
According to Dang Hung Vo, a former deputy minister of natural resources and environment, the real estate market has had unresolved legal bottlenecks in the last three years, making approval and implementation of projects sluggish, leading to lack of cash flows for developers.
Some major developers had to spend almost a whole year completing legal procedures and restructuring assets to redeem corporate bonds and repay bank loans.
Le Hoang Chau, the president of the Ho Chi Minh City Real Estate Association, said legal problems accounted for 70% of the difficulties faced by real estate firms, and the best solution would be to amend the Land Law.
The Government has called on the National Assembly to pass amendments to the law at its extraordinary session this month.
Real estate businesses were also unable to raise funds in 2023.
After corporate bond issuance regulations were tightened at the beginning of 2022, developers found it very hard to mobilize capital through this channel, and some months saw not a single issuance.
According to statistics from the Vietnam Bond Market Association, in the first 11 months of 2023 issuances by real estate firms were worth only VND70 trillion (US$2.9 billion) or equivalent to 25% of the 2021 figure.
Duong Thuy Dung, executive director of CBRE Vietnam, said high bank lending interest rates during the first half of 2023 posed a financial burden for both developers and buyers.
Phan Xuan Can, chairman of property consultancy SohoVietnam, predicted sales would improve in 2024 but profitability to decline.
Dung said supply would remain low and mostly in the high-end segment.
She said the economic situation would remain gloomy, affecting the flow of money into the property market.
The Housing Law and Real Estate Business Law have been amended, but since the amendments only take effect in early 2025 they would not have a major impact on the market in the short term, she said.
The real estate market is likely to recover slowly due to limited supply and high prices, she said.
However, the market would see some new opportunities since the Government is accelerating infrastructure development and lowering lending interest rates, she added.