Deep decline in 2023
While the real estate market is affected by the general economy, the villa and townhouse real estate segment is not immune to the same fate. Investors are gradually turning their backs on this segment when cash flow is stagnant and liquidity is stagnant.
In 2023, DKRA Group said that the new supply of townhouses/villas in Ho Chi Minh City and surrounding areas recently recorded a sharp decline compared to 2022. In all 4 quarters, the market welcomed 907 townhouses/villas from 28 projects, down 87% compared to the previous year. In particular, markets such as Ho Chi Minh City and some neighboring provinces had the deepest decrease in supply.
Supply of townhouses and villas in 2023 will decrease.
The market's new consumption is very low, about 315 units, equivalent to 35% of new supply, only 8% compared to 2022. Transactions mainly occurred in product groups with an average price of 1.9 - 2.4 billion VND/unit and mainly concentrated in the first 6 months of the year.
Ho Chi Minh City and its surrounding areas account for about 47% of supply and 45% of new consumption in the entire market.
Another market research unit, JLL Vietnam, also recorded that the supply of villas and townhouses in the fourth quarter of 2023 reached only 180 units, reaching a record low in the past ten years. The main reason was that investors delayed introducing projects during a period of market weakness; and partly due to delays in legal procedures or construction progress for projects that did not meet the conditions for signing sales contracts.
In terms of absorption, the unit recorded a limited number of transactions with 58 units sold in Q4/2023, down 74.8% year-on-year. The absorption rate in the quarter improved but remained low at 15.1%, while the absorption rate in the year was only 30.9% (down 60 percentage points year-on-year).
The lack of liquidity in the villa and townhouse segment is assessed to be due to the general impact of the market economy.
According to the Vietnam Association of Realtors (VARS), in 2023, large-value land plots and villas/townhouses were recorded to have a loss of 30-40% compared to the peak. However, this situation has been basically controlled and gradually stabilized over time. In localities with clear signs of recovery, the selling prices of these segments have remained stable, even increasing slightly by 3-5% in some places.
Although the general economic situation is not optimistic, the real estate market also records difficulties, but the price base is still considered relatively high compared to both real value and financial capacity of the people.
Market expectations by the end of 2024
According to Nguoi Dua Tin , in 2023, the villa and townhouse segment will face difficulties, with low product supply due to many legal procedures and tightening of loans, which will cause the general market to lack liquidity, especially for the villa and townhouse segment, which requires very high financial potential.
However, with the Government issuing many policies to stabilize the real estate market, the State Bank has reduced deposit interest rates and lending interest rates to circulate cash flow. This is believed by many experts that the real estate market will recover, in which the villa and townhouse real estate segment will return to orbit.
DKRA Vietnam forecasts that new supply and demand for the townhouse/villa segment is expected to increase slightly, reaching about 1,200 - 1,500 units. The market in provinces bordering Ho Chi Minh City may lead the new supply.
In particular, the group of products with completed legal procedures, projects with completed infrastructure, developed by reputable investors will receive much attention from customers. The primary selling price level will remain stable in 2024. At the same time, many investors will continue to apply market stimulus policies.
Talking to Nguoi Dua Tin , Mr. Nguyen Duc Luan (residing in Thu Duc City, Ho Chi Minh City, consultant) said that currently, customers are very careful when looking to buy villa and townhouse projects. Although the general market is slow and liquidity is low, from the end of 2023 and the beginning of 2024, there have been many buyers.
However, prices will have a more obvious difference compared to the "peak" period of the market. According to Mr. Luan, this segment is always sought after by customers with economic conditions, in 2024, villas and townhouses will still be one of the favorite real estate products.
Townhouses worth tens of billions in Thu Duc City, Ho Chi Minh City.
Ms. Pham Thi Nguyen Thanh, General Director of Dat Xanh Services, commented: “Villa and townhouse real estate is one of the most developed and leading investment channels in the segment and has stimulated market demand for many years. In 2023, limited supply and poor liquidity will affect this segment.
However, with the legal clearance and the emergence of supply in Ho Chi Minh City and neighboring provinces, the market for townhouses and villas will improve and become more vibrant from the first half or the end of 2024.
Sharing the same view, Ms. Trang Le, Senior Director of Consulting and Research at LL Vietnam, assessed that the market for townhouses and villas will improve supply in 2024.
“Through the purification process, the internal health and ability to adapt to difficulties and challenges of the subjects existing in the market will be improved. The changes in the new law, although not yet applied, will be a positive signal for the subjects to place their trust and revive their spirit for the preparation stage in the coming period. In 2024, real estate businesses will also have many new strategies to bring products to the market.”
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