VNDIRECT RESEARCH
RESIDENTIAL MARKET: POISED FOR A STRONG RECOVERY AHEAD Analyst(s): Toan Chu Duc toan.chuduc@vndirect.com.vn Tu Nguyen tu.nguyencam2@vndirect.com.vn
We see three key factors to drive residential property demand in FY22F A board-based recovery of macro fundamentals will propel property market in FY22F The global economy would remain strong growth momentum in 2022F. The International Monetary Fund (IMF) forecast the global economy to expand by 4.9% yoy in 2022. Noted that, the global economic growth rate averaged around 2.8% per year in the period 2016-2019 (before the COVID-19 pandemic). Being the largely net exporting economy, we believe Vietnam is well-placed to reap the benefits from global demand recovery. In addition, we expect a high vaccination rate for Vietnam in 1H22F. We project Vietnam’s GDP rising by 7.5% in 2022, with resilient growth in all sectors. Meanwhile, we do not see the inflation risk in the next two quarters. Vietnam’s headline inflation slowed to 2.1% yoy in Sep (vs. 2.8% yoy in the previous month). For 9M21, headline CPI averaged at 1.8%, which was far below the government’s target of 4.0%. We expect inflation pressure to remain low in the next two quarters before rising since 2Q22 due to (1) the recovery of domestic demand and (2) no longer government price reduction for electricity, water and telecommunications as in the second half of 2021 and (3) high energy prices expected in 2022F. Housing demand fueled by low mortgage interest rates We see the average mortgage rate from local banks stayed relatively flat in 9M21, in a range of 9.2-9.5%, still a 10-year low. Given the benign inflationary pressure, we expect the SBV to maintain its accommodative monetary policy into 2022F. We maintain our view that the mortgage rates will still be remained at a low rate until late-2Q22 at the earliest to lower barriers to financing and owning a property.
Figure 110: We believe mortgage rates will still be maintained at a low rate until late-2Q22F at the earliest
Figure 111: Banks' 6M/over-6M tenor deposit rates continued to drop in 9M21 7.5%
7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0%
MBB - 6M BIDV - 6M TCB - 6M
Sources: VNDIRECT RESEARCH, DOMESTIC BANKS
VCB - 6M VPB - 6M TPB - 6M
11/21
09/21
07/21
05/21
03/21
01/21
11/20
09/20
07/20
05/20
03/20
01/20
11/19
09/19
07/19
05/19
03/19
01/19
11/18
09/18
07/18
05/18
03/18
01/18
3.5%
CTG - 6M LPB - 6M VIB - 6M
Sources: VNDIRECT RESEARCH, DOMESTIC BANKS
Accelerating infrastructure development becomes property market’s key growth engine going forward Stricter social-distancing measures and construction material prices hikes caused several delays in the implementation of public investment in 3Q21. However, public investment recovered steadily in Oct 2021 after the government eased social-distancing measures across the country since late-Sep. Per GSO data, the implemented state capital (public investment) jumped 20.4% mom to VND41.7tr (-13.9% yoy). For 10M21, implemented state capital dropped 8.3% yoy to VND318.6tr (vs. an increase of 31.6% yoy seen in the same period last www.vndirect.com.vn
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