Ready-built houses in the South are unsold

In the southern provinces, only 3 townhouses on the primary market - first opened for sale by investors - were traded in April, the lowest level since the beginning of the year.

The director of a real estate trading floor based in District 5, with more than 100 employees, said that the number of townhouse and villa transactions in Ho Chi Minh City has dropped to such a low level that many projects have not sold any products. According to records from distribution floors, a super project of low-rise houses built quite close to the new urban area of Thu Thiem, in the past four months, sold 2 units (not including the products sold by investors themselves because these units do not have a sales team).

In particular, a pre-built housing project in Thu Duc City has seen a trickle of transactions since the beginning of the year, selling one unit every 7-14 days. "Previously, out of 10 customers who came to see the project, only one person closed the transaction, but now out of 30 customers, only 0.5-1 product is closed. Many people only look but do not make a decision," said the director of the real estate floor above.

According to VnExpress , low-rise houses and pre-built townhouses in Ho Chi Minh City cost VND15-20 billion per unit, targeting buyers with ready cash flow (50% loan, 50% cash payment) and are currently very difficult to reach because of high interest rates. This segment in Duc Hoa (Long An) with a street-front location priced at VND10 billion has also been difficult to find buyers in the past month. In the Bien Hoa and Nhon Trach (Dong Nai) markets, project-based townhouses priced at VND12-16 billion per unit or more have been stagnant for many weeks now.

The above developments are also mentioned in the report of DKRA Group (a real estate services company). Accordingly, in April, only 3 townhouses and villas in Ho Chi Minh City and surrounding areas were sold from the primary basket. This is the lowest liquidity recorded by month since the end of 2022, and the lowest level in half a decade on a quarterly basis.

This unit said that market demand is very low, equivalent to only 0.3% compared to the same period last year. Ho Chi Minh City and Binh Duong did not have any transactions last month. Projects opened for sale in April had prices that decreased by an average of 8-10% compared to the previous opening (about 6 months apart). The policy of discounting the townhouse market by up to 20%, committing to re-renting within 12 months was applied by some investors to stimulate the primary market but has not recorded any changes.

Real estate in the East of Ho Chi Minh City. Photo: Quynh Tran — Real estate in the East of Ho Chi Minh City. Photo: *Quynh Tran*

Mr. Chau, a real estate broker who has been operating for more than 10 years in Ho Chi Minh City and Dong Nai, said that not only the primary market is facing difficulties, but also the demand for pre-built houses in the secondary market (where investors buy and resell) is also low. Although there are many cases in the secondary market where townhouses and villas in the suburbs have been reduced by 15-25% due to the old owners being financially overwhelmed and selling their goods, buyers still think the prices are not attractive.

According to Mr. Chau, local people are not interested in buying townhouses in the province because these products only serve the need for future residence, and cannot be used for business when there are currently few residents. Meanwhile, customers buying pre-built houses in the suburbs are mainly investors from Ho Chi Minh City, but this group is currently financially weak or prefers to keep cash.

Mr. Vo Hong Thang, Deputy Director of R&D Company DKRA Group confirmed that this situation has lasted for more than four months and is showing signs of getting worse.

According to Mr. Thang, ready-built houses in projects on the secondary market are currently experiencing strong fluctuations when there are many demands for selling at even value, cutting profits, and even reducing prices to cut losses among investors using bank loans (using financial leverage). However, the demand for selling is high but the buying power is very weak.

According to Mr. Thang, the reason for the stagnant liquidity of townhouses is primarily due to the extremely high value of the assets. The selling price of pre-built houses in projects is around 10 billion VND per unit in the outlying provinces and up to millions of USD in Ho Chi Minh City, causing investors with money to be cautious.

The second reason is that the secondary price reduction wave shows no signs of stopping, making buyers afraid of further price drops, leading to a wait-and-see mentality.

In addition, incomplete legal issues, investors' reputation is not convincing enough, project progress is not in line with commitments and the slow economic recovery also keeps buyers out of the market.

Mr. Thang predicted that with the frozen market and low homebuyer sentiment, the liquidity of townhouses may continue to decline in the coming months.

Vu Le

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