Increasing supply of affordable apartments will 'warm up' the market at the end of the year

The market is "thirsty" for affordable apartments

Although the market has had difficulty with liquidity since the end of 2022 until now, the average price of the segments has continued to increase. That is one of the reasons why many apartment products are currently in the price range of the high-end segment.

According to the report on the real estate market in the third quarter of 2023, just announced by the Ministry of Construction , the selling price of apartments in the primary market in Hanoi and Ho Chi Minh City both increased slightly in the last quarter. Notably, about 96% of the new supply in the third quarter came from the high-end segment and the remaining 4% of the new supply was in the luxury segment, from the next phase of a project in the Thu Thiem New Urban Area. The primary selling price of the apartment market in Ho Chi Minh City in the third quarter of 2023 reached more than 60 million VND/m2.

In the secondary market, the average price reached VND45 million/m2, up 3% compared to the previous quarter. Meanwhile, secondary prices in the luxury and affordable segments remained almost the same compared to the second quarter. The quarterly increase was mainly due to the increase in secondary prices in the high-end and mid-range segments, especially for projects near the center such as Binh Thanh District, Thu Duc City.

The increasing supply of affordable housing will dampen the market in the final stages of the year, figure 1. — High-end apartments with large supply put pressure on liquidity recovery of the southern market.

Cushman & Wakefield’s report also showed that developers tend to keep prices stable to boost demand in the market. Therefore, the average primary price in the third quarter was almost unchanged compared to the previous quarter, but increased by 15% year-on-year.

Even in the neighboring provinces of Ho Chi Minh City such as Binh Duong , Dong Nai, Long An, etc., there are not many new projects with affordable prices. Meanwhile, the demand for housing is currently very high, but products that meet real housing needs are in short supply.

Meanwhile, recent market records show that successful real estate transactions mainly fall into the affordable housing segment, with complete legal documents, interest rate support and reasonable payments.

Many affordable products enter the market at the end of the year

With the demand for affordable housing still present, during the recent downturn, many investors have begun to restructure their available resources or research to shift supply to segments that meet demand. Therefore, the Southern market has recorded positive signs that more affordable products will appear at the end of the year.

Specifically, recently, the Department of Construction of Can Tho City officially announced that it will receive registrations to buy nearly 1,000 social housing units at the Nam Long II Central Lake project with a selling price of only 15.8 million/m2.

In Long An, there are about 500 affordable apartments of the EHome Southgate project priced from only 1 billion/50m2 apartment (equivalent to 20 million/m2) in the Waterpoint urban area that have also been launched on the market. Previously, other blocks of this project were "sold out" when they were launched for sale because the price was suitable for the income of young households.

The increasing supply of affordable housing will dampen the market in the final stages of the year, picture 2. — Many social housing and low-cost housing projects "launched" at the end of the year will partly address market demand.

In Di An (Binh Duong province), the Phu Dong SkyOne project with an expected price of about 30 million VND/m2, the lowest is about 1.5 billion VND/unit, expected to be on the market at the end of this year, is also one of the product lines with a "soft" price in the area.

In the Ho Chi Minh City market, most of the low-cost projects that are planned or have been launched are located in suburban areas, bordering suburban provinces such as Hoc Mon, Thu Duc City, Binh Chanh... with prices from 30 million VND/m2 such as the 9X An Suong project or Bcons Polaris.

With prices suitable for real housing needs, the above projects will help the market "quench its thirst" for liquidity in the final period of the year. Especially when discount policies and support for real buyers are promoted by investors to create a good mentality at this stage, when the demand for buying houses increases. At the same time, many people also expect that policies to increase cash flow into real estate will also help the market have more motivation to develop, especially in the affordable segment.

Source