Expect positive trading from year-end
In early October 2023, the real estate market report for the third quarter of 2023 by Savills Vietnam Market Research Company showed that apartment supply has returned to the market with the number of new apartments increasing by 572% quarter-on-quarter and 11% year-on-year.
Specifically, in the third quarter of 2023, Ho Chi Minh City launched 2,528 apartments, the new apartment supply increased by 572% quarter-on-quarter and 11% year-on-year. Of which, Thu Duc City accounted for 74% of the market share, other new supplies included class B and C projects in Binh Tan district and Binh Chanh district.
Primary supply increased 32% QoQ and 12% YoY to 7,722 units, partly relieving the pressure of supply shortage. Grade B had the largest supply with 49% market share, followed by Grade C with 34% market share and Grade A with 17%.
Transaction volume in Q3/2023 reached 2,003 units, up 561% QoQ and 102% YoY. Class C projects had 651 transactions, showing that demand for affordable housing remains high. Class B projects had 210 transactions, while Class A had only 42 transactions.
According to experts from Savill Vietnam, since the beginning of 2023, the Government has taken many steps to support the real estate market. The Ho Chi Minh City People's Committee has focused on resolving 148 projects; 39 projects have achieved results. The State Bank has continuously lowered interest rates and Circular 10 will bring better access to capital for ongoing projects. These mechanisms are expected to help increase supply and promote market development.
Savill Vietnam forecasts that by the end of 2023, more than 1,900 new apartments are expected to be offered for sale. Class C will be the main product with 69% market share, Class B will have 26% market share and Class A will have 5%.
It is expected that in the fourth quarter of 2023, about 200 new units will be offered to the market. And by 2026, the market is expected to welcome an additional 4,600 units for sale as well as many key infrastructure projects being completed.
Ms. Giang Huynh, Deputy Director of Market Research and S22M Department of Savills Vietnam, assessed that the real estate market in Ho Chi Minh City in the third quarter of 2023 has improved in terms of transaction volume and supply. However, the number of 7,722 units in the quarter is still insignificant compared to before. The reason is due to the lack of segment C, segment B and excess segment A.
Developers have adopted a variety of sales policies, including early interest and principal support, extended payment schedules, and rental commitment programs.
Buyer's market
Commenting on the developments of the real estate market, many experts said that interest rates tend to decrease but remain high. Specifically, banks have begun to loosen credit for the real estate sector by reducing interest rates and reducing requirements for borrowers so that investors can offer more attractive sales policies. However, more time is needed to assess whether the liquidity of the real estate market is really better or not.
Homebuyers are still worried about interest rate fluctuations after the investor ends the incentives. Therefore, investors selling in this context must solve the interest rate issue, extend the payment period for customers with good policies... to hope to increase liquidity.
A series of transport infrastructure projects being implemented in southern provinces and cities are expected to stimulate the real estate market.
According to Mr. Vo Hong Thang, Director of Consulting Services and Project Development of DKRA Group, liquidity in the real estate market will have positive changes at the end of 2023. The "wave" of home buying is expected to increase again from the fourth quarter of 2023 or at the latest in the first half of 2024. In the coming time, the real estate market will have a certain recovery in some segments and areas with infrastructure connections.
“The selling price level has recently been adjusted and decreased significantly compared to the previous period. Therefore, buyers with the need to settle down or invest in accumulating assets can completely consider finding a house that suits their financial conditions. It can be said that the real estate market at this time belongs to the buyer,” Mr. Thang analyzed.
Sharing the same view, a representative of Van Khang Phat Company stated that from the fourth quarter of 2023, the real estate market will show signs of recovery, but not nationwide. Accordingly, the market will only recover soon in localities where real estate prices have not increased significantly, but the growth potential and internal value of these localities are still large and the purchasing power is large. Typically, the suburbs of key cities.
Previously, Vietnamese people always tended to concentrate in the center of big cities, leading to these areas often being overloaded and cramped, leaving almost no room for real estate market development, due to scarce land funds.
Therefore, instead of moving to the core area, the suburbs of cities are now becoming attractive destinations for many people and real estate investors. In particular, with the expansion and upgrading of infrastructure to the suburbs, purchasing power will increase. Wherever there is large purchasing power, the real estate market will recover soon.
Transport infrastructure boosts real estate market
Mr. Nguyen Duy Thanh, General Director of Phuc Hung Real Estate Joint Stock Company, commented that from 2022 to present, many transport infrastructure projects in the South have been focused on investment and construction. This is also the driving force for the real estate market in general and for land in particular.
However, according to Mr. Thanh, unlike the past, when land often followed the highway infrastructure, in the near future, the subdivision and sale of land will be much more limited. Transfers will also become more difficult. And land prices will not increase as quickly as before.
“The recovery time of the southern land market will be slower because investment psychology factors are still quite weak at this stage. Policies related to interest rates and credit must have a delay of at least 3-6 months, often slower than the development of the market. That is why the time for the land market will not be until 2024,” said Mr. Thanh.
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