Challenges and Solutions to Increasing Real Estate Inventory

In the current context where the real estate market faces numerous challenges, the significant increase in real estate inventory has exacerbated supply-demand and pricing paradoxes. This situation not only pressures real estate enterprises but also severely impacts the sustainable development of the market. This article provides a detailed analysis of the primary reasons behind the growing inventory, even as property prices remain high.

1. Real Estate Inventory Situation

According to Q3 2024 financial reports, the inventory of many major real estate companies has significantly risen:

• Khang Điền Housing Investment and Trading JSC: Inventory reached VND 22,450 billion, accounting for 71% of total assets. Major projects include Khang Phúc - Tân Tạo Residential Area (VND 6,650 billion) and Bình Trưng Đông (VND 4,329 billion).

• Nam Long Investment JSC: Inventory reached VND 20,303 billion, a 17% increase from the beginning of the year, accounting for 68% of total assets.

• DIC Investment and Construction Development JSC: Inventory reached VND 7,865 billion, a 20% increase. Residential and apartment projects accounted for the largest portion.

According to the Ministry of Construction, the nationwide real estate inventory reached 25,937 products, a 52% increase compared to Q2 2024. Among these, apartments accounted for 4,688 units, individual houses 12,250 units, and land plots 8,999 plots.

2. Reasons for Rising Real Estate Inventory

2.1. Legal Obstacles

Many real estate projects are stalled due to legal bottlenecks, particularly delays in procedural processing, significantly hindering project implementation. For instance:

• Ho Chi Minh City has 143 projects awaiting legal clearance.
• Hanoi has 246 projects delayed due to regulatory changes and insufficient coordination among stakeholders.

2.2. Overinvestment Strategies

During the previous boom period, many enterprises heavily invested in land and resort real estate projects. However, as the market slowed, these products became illiquid.

• High-end resorts in remote areas lack appeal due to declining demand.
• High-end housing projects are priced beyond the average buyer’s affordability.

2.3. Supply-Demand Mismatch

Research indicates that the paradox between supply and demand contributes to increased inventory. While demand for mid-range housing has surged, the majority of supply remains in the high-end segment.

• High-end projects are not aligned with real demand.
• Meanwhile, mid-range and affordable housing supply is insufficient, forcing buyers to opt for rentals.

3. Impacts of High Inventory

3.1. Pricing Paradox

Despite high inventory levels, real estate prices continue to rise, particularly in major cities like Ho Chi Minh City and Hanoi. According to the Ministry of Construction, apartment prices increased by 22-25% over the past year, with some areas witnessing spikes of up to 40%.

3.2. Increased Market Difficulties

Prolonged high inventory levels create severe difficulties for enterprises, reducing liquidity and escalating bad debts.

4. Solutions

• Resolving Legal Issues: Accelerate procedural processing and reduce project approval delays.
• Refocusing Segments: Shift focus to mid-range and affordable housing to meet real demand.
• Curbing Speculative Investments: Limit resort and land projects with low liquidity.

The current real estate inventory situation reflects the challenges faced by the market. Close collaboration between the government, enterprises, and homebuyers will be crucial for market recovery and sustainable development.