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| Latest real estate: New supply in Hanoi apartment market witnessed a significant decline. (Source: XD Newspaper) |
Consumption improves, recovery momentum remains weak
VNDIRECT's recent residential real estate industry report said that market sentiment is cautious due to the high interest rate environment that is not really attractive to home buyers and real estate developers, along with remaining policy bottlenecks and most of the new supply coming from the high-end segment.
According to CBRE, the number of apartments sold in Ho Chi Minh City in the first half of 2023 decreased by 78% year-on-year (y/y) and 69% compared to the second half of 2022 to about 2,300 units in the context of a 72% y/y decrease in supply and a 2% decrease compared to the second half of 2022 (about 4,100 units). The absorption rate in the first half of 2023 was only 59% (-11 percentage points y/y/-133 percentage points compared to the second half of 2022). The absorption rate of apartments in Ho Chi Minh City decreased significantly, because of the more than 4,100 units offered on the market, products in the luxury apartment segment accounted for more than 70%.
The average primary price of apartments in Ho Chi Minh City recorded the first decrease since 2018 (down 4.8% yoy) in Q2/2023. The high-end and luxury segment decreased by 4-6% yoy while other segments recorded an increase of 2-4% yoy in Q2/2023. The secondary price of landed properties remained unchanged compared to the previous quarter in Q2/2023.
New supply in the Hanoi apartment market witnessed a significant decrease (-52% yoy/-41% yoy to 3,900 units - the lowest in 5 years) and consumption also decreased (-63% yoy/-27% yoy to 4,000 units) in the first half of 2023. The absorption rate in the first half of 2023 was recorded to remain high at 109% (+22 percentage points yoy to 2H2022).
Primary apartment prices in Hanoi remained unchanged from the previous quarter in all segments in Q2/2023, except for the mid-range segment (+10% q-o-q/15% y-o-y). Meanwhile, the average secondary prices for both landed properties and apartments recorded an increase of 8% q-o-q.
VNDIRECT experts commented that positive signs from real estate businesses proactively buying back corporate bonds worth VND12,561 billion in advance have helped the value of bonds maturing in the second half of 2023 and 2024 decrease by 12% and 10% respectively compared to before the buyback, thereby reducing the pressure on bond maturity although the pressure remains high, especially for real estate businesses facing cash flow difficulties.
In the first 6 months of 2023, VNDIRECT experts found that the risk of insolvency of real estate enterprises has decreased slightly when enterprises extended bond maturity and extended bank debt according to Decree No. 08/2023/ND-CP and Resolution No. 33/2023/NQ-CP.
Regarding the outlook for the residential real estate market, VNDIRECT experts believe that the market will remain sluggish next year, and the recovery will be clearer from the second half of 2024 when monetary policy is loosened. In the previous stage, the market was in a state of oversupply and inflation was very high, while currently the project supply is very limited and demand is still high. Therefore, VNDIRECT experts believe that the current market will recover faster.
Villas worth tens of billions of dong are being advertised for sale
According to folk beliefs, the seventh lunar month is often considered an unlucky month to carry out important work, including buying a house or investing in real estate. However, real estate sales during this seventh lunar month are still bustling, many of which are villas and townhouses worth tens of billions of dong.
A survey on a real estate trading channel shows that dozens of villas in the Ciputra urban area in Hanoi are being offered for sale at prices ranging from 44-96 billion VND, depending on the area and location. Most notably, a single villa with an area of 600m2, with a frontage of more than 80m... is being offered for sale at 210 billion VND.
Similarly, another villa in Ciputra urban area with an area of 300m2, 12m frontage, with high-class interior imported from Europe is being offered for sale at 96 billion VND, equivalent to nearly 300 million VND/m2. Or a villa with a land area of 240m2, built on 97m2, 3 floors high with a surrounding garden, two airy frontages, a wide road in front of the house that can park many cars... is being offered for sale at 72 billion VND.
According to a survey, townhouses and villas in many urban projects in the west of Hanoi are also being sold en masse, at deep losses.
For example, a townhouse in the Nam An Khanh Sudico urban area with an area of 279 square meters, 3.5 floors with rough construction and completed exterior... is being sold at a loss for 14 billion VND, equivalent to 50 million VND/square meter.
At the end of last year, the above townhouse was advertised for sale at 17-18 billion VND. In addition, the average price of real estate products in this urban area is fluctuating from 80-120 million VND/m2.
According to a survey in the eastern area of Hanoi, many villas priced from over 10 billion VND to tens of billions of VND are also being sold at a loss.
Notably, information about selling villas and townhouses at a loss at the Vinhomes Ocean Park 2 urban area project (Van Giang, Hung Yen) has appeared frequently on the real estate market. These real estate products are being sold at a loss of 15-30% compared to the price on the sales contract with the investor.
In fact, market reports from many real estate market research units in recent times show that due to weak market sentiment and difficulties in disbursement, transaction activities in the first and second quarters of the villa and townhouse market have almost frozen. Meanwhile, some large projects have temporarily stopped trading.
Notably, some projects have witnessed many transactions of deposit refunds or returns due to banks tightening credit room for real estate loans, making it impossible for buyers to pay. Many investors using financial leverage beyond their ability to pay were forced to cut losses when the preferential interest rate program expired.
Mr. Nguyen The Diep - Vice President of Hanoi Real Estate Club - said that there are many reasons why owners of townhouses and villas have to sell or sell at a loss at the present time. Among them, the notable reason is that many investors want to withdraw capital and change investment direction. Another reason is that many investors use large financial leverage, and when they cannot control it, they have to sell massively.
Issuing regulations on management and use of villa funds in Da Lat
Lam Dong Provincial People's Committee has just issued Decision No. 53/2023/QD-UBND on management and use of state-owned villa funds in Da Lat city.
According to the classification of Lam Dong Provincial People's Committee, in Da Lat city there are 166 villas divided into three groups, including: Group one villas are villas with typical values in terms of architectural art, landscape and historical and cultural values (3 villas); Group two villas are villas that do not belong to Group one but have architectural art, landscape, historical and cultural values (including 69 villas); Group three villas are villas that do not belong to Group one and Group two villas (including 94 villas).
Of the 166 state-owned villas, 30 have been demolished, 25 have been renovated, repaired, upgraded, and interspersed with constructions to meet the needs of the agencies assigned to the villas or individuals and businesses renting the villas.
The Decision promulgating regulations on management and use of State-owned villa funds in the area includes 16 Articles, 3 Chapters including general regulations, specific regulations and implementation organization.
The Provincial People's Committee assigned the Department of Construction to take the lead and coordinate with relevant agencies in reviewing, adjusting, and determining the list of villas according to regulations; and guiding the implementation of these regulations so that organizations and individuals know and implement them.
At the same time, closely coordinate with relevant agencies to publicly announce the list of classified villas and regularly inspect and urge the implementation of this regulation.
The Provincial People's Committee assigns the Department of Natural Resources and Environment, the Department of Culture, Sports and Tourism, the Department of Finance, the Department of Planning and Investment, the People's Committee of Da Lat City, and the Da Lat City Housing Management Center, depending on their functions and tasks, to take the lead and coordinate with relevant departments and units to guide the implementation of procedures on land allocation, land lease, land recovery, and to inspect and examine the land management of villas according to regulations.
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| The Governor's Palace is no longer listed in group 1 villas. (Source: BXD) |
At the same time, review the State-owned villa fund to build a scientific dossier to advise and propose the Provincial People's Committee to recognize relics for villas with typical historical - cultural and architectural values; research and propose the allocation of funds for management, maintenance, renovation and reconstruction of villas according to regulations.
Regularly inspect and monitor the progress of investment in villas; advise on revoking investment policies, terminating investment activities, revoking investment registration certificates (if any) for violations of investment laws...
Notes for first-time apartment buyers
Buying and selling apartments is a high-value transaction. Finding an apartment that meets safety, convenience and financial requirements is a difficult problem for many young families. Without experience and knowledge, it can lead to buying an apartment that is not legally complete, leading to a financial crisis...
Financial Considerations
How much money should you have to buy an apartment is still a topic of public interest because the demand for housing is still very high. Almost everyone has the problem of not having enough finance to buy a house, but currently, many banks are willing to lend up to 70% of the apartment value.
However, according to many experts, buying a house should only take place when the financial situation is positive. The larger the loan amount, the higher the obligation to pay principal and interest. Therefore, buyers should also consider an appropriate loan ratio.
Project legal check
Buying an apartment requires a relatively large amount of money. Young couples are often not financially strong, so they must carefully check legal documents to avoid being scammed and losing money.
Currently, in the real estate market, there have been many cases of apartment and townhouse projects where, although people have lived in them for decades, they have not yet been granted red books or signed sales contracts... These cases will leave huge legal risks and benefits for home buyers.
In addition, there are many cases where customers have deposited and paid 50-70% of the house purchase price, but the project is behind schedule and has not been handed over to customers by the deadline.
Choose a reputable investor
Another experience in buying an apartment that cannot be ignored is whether the investor is reputable and trustworthy or not. Because the investor, as well as the contractor and construction unit, will directly affect the legality, quality of the house, and construction progress of the entire project.
Consider internal and external amenities
The reason why people choose to live in an apartment is to use the accompanying external facilities such as parks, swimming pools, shopping areas, etc.
Therefore, you should prioritize choosing apartments that meet these conditions. If your financial level does not allow, then consider apartments that only meet housing needs and do not have external facilities.
Apartment security system
Security system is one of the most shared experiences when buying an apartment. Because it directly affects the health, life and quality of life of every family member.
You need to observe whether the fire protection system of the apartment building is guaranteed and regularly maintained. Whether the management unit and security team strictly monitor and operate the apartment building or not. Especially, whether there is a quick response to promptly handle emergency situations.
Management fees and associated costs
Management costs and accompanying costs such as garbage collection fees, parking fees, general cleaning fees, etc. are considered satisfactory for the quality and are consistent with the general level compared to apartments of the same price range in the same area.
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