Real estate in central Ho Chi Minh City. Photo by VnExpress/Quynh Tran.
Most of the real estate brokers have decided to proactively leave the market instead of competing for a thinning slice of the pie, said Tran Khanh Quang, General Director of real estate investment firm Viet An Hoa JSC. He said supply of new housing in HCMC has dropped 60 percent this year.
"If in 2017 there was one housing unit sold between three real estate agents, in 2019 there was only one between eight. With average commissions at between 1-1.5 percent of total contract value, some real estate agents end up being unable to cover their living expenses," Quang said.
Another 6,000 agents are estimated to have taken on additional jobs in order to cover living expenses. These people maintain their status as contractors to real estate firms, but because their incomes have decreased significantly, they’ve had to take on more jobs, said Quang, citing data gathered by Viet An Hoa from real estate exchanges.
"Workers had flocked to the real estate market from other professions after the market boomed in the last few years, but now that it is decelerating, they are returning to their old jobs," he added.
In 2015, the number of real estate brokers involved in selling projects in HCMC was 10,000, but had surged to 60,000 by the end of 2018, according to surveys and data gathered by Viet An Hoa from real estate exchanges.
This was because there had been a real estate fever in the city between 2016 and 2018, attracting thousands from other industries to become brokers, sales staff, investment advisors, as well as marketing, management, and brokerage managers, said Quang.
The total remuneration for agents, which include salary and commission, could range from hundreds of millions of dong to billions ($1 billion = $43,230) per year in the years 2015-2017. Even nearing the end of 2018, there were still many businesses recruiting management roles offering billions of dong, Quang added.
However, by early 2019, many agents begun to move to other provinces to take advantage of emerging real estate markets instead of competing in the decelerating central market that is HCMC. In the city, new supply dropped 50-60 percent in certain segments, while the majority of new real estate were high or mid-end, segments that were more difficult to sell, he said.
"We are now in December, the peak time for year-end sales in the real estate market. But there are no signs the market is picking up, so it is likely that another 10 percent of real estate brokers in HCMC, equivalent to 6,000 people, will quit next year," Quang said.
According to the Real Estate Coffee Society of HCMC, brokerages in the west and northwest of the city have cut staff by 50-60 percent this year.
A recent report by the Ho Chi Minh City Real Estate Association (HoREA) said that after reaching a five-year high of 83 in 2017, the number of housing projects had fallen to 59 last year.
The number of completed units in the first nine months of this year fell 53 percent year-on-year to 12,453, while only 12 projects were approval, a 72 percent decline, the report said.
The number of completed units in the first nine months of this year fell by 53 percent year-on-year to 12,453, while only 12 projects received approval, a 72 percent decline, the report said.