After five years of rapid growth, it has been slowing down, with many developers reluctant to put down money because it is difficult to make profits as quickly as earlier, while buyers are waiting for prices to fall, according to analysts.

The number of apartment transactions in key localities including Hanoi, HCMC and some coastal provinces was 26.1 percent down in 2019 to around 83,000, according to the Ministry of Construction.

The resort real estate segment recorded around 6,200 transactions, down 20 percent, the ministry said.

Pham Duc Toan, CEO of real estate firm EZ Properties, said the biggest challenge in 2020 would be sustaining buyer confidence, which has been eroded by the proliferation of "ghost" projects and the collapse of several development models.

Ghost projects are those that lack construction licenses, or fail to complete construction, but are fraudulently sold while still in the planning phase.

In 2019, the biggest controversy was in September, when the HCMC police found that major developer Alibaba Company had bought 600 hectares of agricultural land and sold plots in it by claiming it was urban housing land though authorities had not given approval for conversion.

According to the police, Alibaba had by then sold land in 40 projects to over 6,700 buyers for around VND2.5 trillion ($108.07 million).

Meanwhile, the resort property segment witnessed the first failures of the condotel model, which is typically a condominium-hotel hybrid operating as a commercial hotel though the units are individually owned.

It is a relatively new real estate model that has been around for three years.

The biggest controversy occurred in November, when the developer of Cocobay, a large condotel complex in central Da Nang City, reneged on its promise to pay guaranteed annual returns to investors, leaving many who had taken loans to buy units in the lurch.

Many other condotel developers are also struggling to make the guaranteed payments and some projects have collapsed.

For instance, the developer of the Bavico condotel project in central coastal Nha Trang Town negotiated with buyers to reduce the guaranteed return from 15 percent a year to 8 percent, but defaulted even on that.

Against this backdrop, liquidity in the property market is expected to go down in 2020, meaning prices are unlikely to rise.

The apartment and resort segments are expected to be affected the most next year, Toan said.

Dwindling supply

Nguyen Tran Nam, Chairman of the Vietnam Real Estate Association, said falling supply would also be a major challenge in 2020, a trend that began at the end of 2018 and is expected to drag on until 2022, causing constant shortages in the market.

According to the latest report  by the Ho Chi Minh City Real Estate Association, the number of completed units in the first nine months of 2019 fell by 53 percent year-on-year to 12,453, while only 12 projects were approved, a 72 percent decline.

The report cited conflicting provisions in various laws regulating the sector making it difficult for developers to obtain licenses.

A CBRE Vietnam report last October also found that there was no new supply of affordable housing in the third quarter of 219, saying low profit margins were the reason developers were reluctant to start such projects.

Ha Quang Hung, Deputy Director of Housing Management at the Ministry of Construction, said scams like the one perpetrated by Alibaba has forced the government to tighten land regulations, making it even more difficult to sell, while buyers have become more cautious.

Nguyen Van Dinh, General Secretary of the Vietnam Realtors Associations, said legal troubles are nothing new but would continue to be a bottleneck for the market, especially since provinces and cities are reviewing and amending their land management regulations.

According to analysts at real estate consultancy Savills, it is also unclear when the government will be able to enact clear regulations and standards for certain segments such as resort real estate and officetel, and these will be a drag on the market in 2020.

For over a year banks have been wary of lending to the real estate sector, especially the high-end segment, citing concerns about bad debts, given the inherent instability and other difficulties faced by the sector.

In the second quarter of 2019, they increased mortgage rates by 1-2 percentage points, with some offering loans of no more than 70 percent of the property value instead of the previous 80-90 percent.