Southern apartment market will flourish when policies are 'absorbed'

There is unlikely to be a breakthrough in the short term.

According to DKRA's report, in 2023, new supply and primary supply in the whole market will decrease by 60% and 68% respectively compared to 2022. This is also the lowest level in the past 5 years. In particular, apartment projects are concentrated in Ho Chi Minh City and Binh Duong.

Ho Chi Minh City market leads the entire market, accounting for 64% of the total primary supply in 2023, most of which comes from projects in the East of the city. Demand increased slightly in the second half of the year, but in 2023, the consumption rate only reached about 44% of the total primary supply in the entire market, which is also the lowest level compared to the average of 2020 - 2022 (ranging from 68% - 87%).

Primary consumption is concentrated in mid-range projects with prices ranging from 40 - 55 million VND/m2, with completed legal procedures, rapid construction progress, and convenient connections to the city center. Primary selling prices have not fluctuated much compared to the beginning of the year, however, investors have promoted many policies of quick payment discounts, principal and interest grace periods, etc. to stimulate buyers.

South apartment will recover when the policy is absorbed into the market picture 1 — The apartment market is not expected to have many fluctuations.

Meanwhile, secondary liquidity remains low, with selling prices recording a general decrease of 3% - 8% compared to the end of 2022, mostly in projects in the legal completion stage, with construction progress delayed.

In the apartment segment, new supply is forecast to increase compared to 2023, fluctuating at 12,000 - 15,000 units. Supply is concentrated in Ho Chi Minh City with about 8,000 - 10,000 units, Binh Duong with about 4,000 - 6,000 units, Dong Nai and Ba Ria-Vung Tau with about 300 - 500 units in each locality and Long An with about 200 - 300 units.

Class A apartments continue to account for a large proportion of the supply structure in the Ho Chi Minh City market, while Class B and C apartments continue to be the dominant segment in Binh Duong as well as neighboring provinces.

Forecasting market developments in 2024, DKRA believes that market demand at the beginning of the year will not fluctuate much compared to the end of 2023 and is expected to improve from the third quarter of 2024, when legal policies are sufficiently "permeated" into the market to help remove legal obstacles and the recovery prospects of the economy.

Market liquidity is concentrated in affordable housing projects serving real housing needs with prices of around 50 million VND/m2 in Ho Chi Minh City or under 35 million VND/m2 in Binh Duong and neighboring provinces.

South apartment will recover when the policy is absorbed into the market picture 2 — Affordable housing is expected to drive the market.

Primary selling prices did not fluctuate much or slightly increased due to pressure from input costs, policies on quick payment discounts, support for principal and bank loan interest deferrals, etc., which continued to be promoted to stimulate market demand.

In the secondary market, liquidity and price levels are unlikely to have any sudden changes in the short term. However, “loss-cutting” transactions and deep price reductions may decrease significantly in 2024 because most buyers who abused financial leverage have restructured or sold off assets in the 2020-2023 period.

Don't expect a breakthrough in other types

Also in this report, DKRA does not have many positive comments on other types in 2024. Specifically with land, new supply in 2024 continues to maintain scarcity, fluctuating around 2,900 - 3,100 plots.

In particular, Long An is the leading locality in the market in 2024 with about 850 - 950 plots for sale. Dong Nai is about 750 - 850 plots. Binh Duong is expected to open for sale about 600 - 700 plots. The remaining areas such as Ho Chi Minh City, Ba Ria - Vung Tau, Tay Ninh will distribute about 200 - 400 plots.

Market attention will focus on product groups developed by reputable investors with strong financial potential and projects with completed infrastructure and legal procedures.

In the primary market, the price level has not fluctuated much compared to 2023, preferential policies, discounts, payment extension, etc. continue to be applied by investors to stimulate market demand. In the secondary market, transactions mainly arise in products with completed infrastructure and legal documents, with moderate values suitable for most investors' financial capacity.

South apartment will recover when the policy is absorbed into the market picture 3 — Long An will lead the land market thanks to abundant supply.

For villas and townhouses, supply in Ho Chi Minh City and surrounding areas is expected to increase slightly, ranging from 1,200 to 1,500 units. The market supply is mainly in the next sales phase. In particular, localities such as Long An, Dong Nai, Binh Duong fluctuate between 300 and 500 units, Ba Ria-Vung Tau around 120 and 140 units, and Ho Chi Minh City around 60 and 80 units.

Overall market demand may improve near the end of 2024, with products that have completed legal procedures, projects with completed infrastructure, and developed by investors with financial potential receiving much attention from customers.

The primary price level has not fluctuated much compared to 2023, and investors continue to apply market stimulus policies. Meanwhile, liquidity and secondary price levels continue to decline in 2023, with the decrease mainly concentrated in customers using loans and projects facing legal problems.

For resort real estate, the supply of condotels is forecast to decrease compared to 2023. In general, nationwide, the supply fluctuates around 800 - 1,000 units brought to the market, mainly distributed in Ba Ria-Vung Tau and Quang Ninh. The supply of resort villas is equivalent to 2023, around 250 - 300 units brought to the market, mainly concentrated in Hoa Binh.

South apartment will recover when the policy is absorbed into the market picture 4 — Resort real estate has no positive signs because demand has not returned.

As for resort townhouses/shophouses, the expected supply is equivalent to 2023 with about 200 - 300 units coming to the market, mainly concentrated in Kien Giang. Overall market demand continues to decline and there are no signs of recovery in this segment in the short term.

Primary selling prices remain stable, with little chance of strong price fluctuations in 2024. Discount policies, interest rate support, principal grace period, lease commitments, etc. will continue to be widely applied in 2024.

According to a representative of DKRA Group, the resort real estate market is expected to have difficulty breaking through in 2024 and the market's downward trend is likely to continue for the next 3-5 years.

Source