Townhouse and villa segment is still covered in gray tones

High selling prices, far beyond the affordability of the majority of people, have led to the market for townhouses and villas recording the lowest consumption in the past 5 years.

Savills' latest real estate market report shows that in Ho Chi Minh City, the townhouse and villa product line has performed at its weakest since 2019, with transaction volume and absorption rate continuously decreasing.

Specifically, in 2023, primary supply decreased by 40% year-on-year to 993 units, the lowest in the past 5 years, not to mention mainly high-priced inventory, not new projects. Similarly, sales volume and absorption rate were the lowest in the past 5 years, down to 29% and only reached 286 units, down 73% year-on-year.

Explaining this situation, Ms. Giang Huynh, Deputy Director, Head of Research and S22M (Savills Vietnam) said that the cause comes from the capital mobilization process being affected by the inspection of real estate bond issuance. In addition, the impact of the global economic recession has caused many difficulties for our country's economy, causing income and cash flow of businesses and people to be blocked.

Housing prices in Ho Chi Minh City are increasingly expensive, so outlying provinces such as Dong Nai and Binh Duong will have a great advantage, especially when infrastructure is upgraded and developed synchronously, and travel time is shortened.

On the other hand, the scarcity of land in the inner city of Ho Chi Minh City has pushed up housing prices, leading to reduced affordability, causing the absorption rate to slow down significantly.

“In fact, this decline reflects the cyclical development of the low-rise housing segment, which will gradually have less and less supply in the inner city. More importantly, according to the urban development orientation until 2030, Ho Chi Minh City will focus on developing the high-rise housing segment to optimize land funds, as well as meet the housing needs in the city,” said Ms. Giang.

Savills Vietnam Research added that in 2024, new supply is expected to have 1,400 units entering the market, of which products priced at VND20-30 billion account for about 65%. Continuing high selling prices are a big challenge to absorption speed.

Prices in Ho Chi Minh City are getting more and more expensive, so the surrounding provinces such as Dong Nai and Binh Duong will have a big advantage, especially when the infrastructure is upgraded and developed synchronously, and travel time is shortened. Thanks to the large land fund, real estate products in the surrounding areas have reasonable prices and more diverse products.

In recent years, many investors have acquired land funds in the suburban market to implement large-scale projects, helping to synchronize infrastructure, diversify products with many different areas, and prices are considered quite reasonable. For example, in Nhon Trach district (Dong Nai), villas and townhouses in a large urban project by the river recorded a selling price of 50 - 60 million VND/m2. Another urban project, located in Huong Lo 2 area (Bien Hoa city), has villas and townhouses for sale from 55 to 75 million VND/m2...

Regarding the decline in prices of villas and townhouses, Mr. Vo Hong Thang, Director of the Research and Development Department of DKRA Group, said that many investors who borrowed from banks at a large rate and could not hold out any longer had accepted the reality that real estate would find it difficult to grow again in the short term. In cases where finances do not allow, choosing to deeply reduce prices to cut losses is the best direction for many people.

“Investors who want to benefit from a market recovery must be prepared to wait for years. The higher the value of the product, the harder it is to sell. In the most positive case, the decline will last until the second half of 2024 or even last the rest of the year,” Thang said.

Source