Will the apartment market break out in 2024?

According to a survey by Batdongsan.com.vn on the demand for buying a house in 2024, 65% of respondents will buy a house in the next year. Of which, the demand for buying apartments with a selling price of 2-4 billion VND accounts for the majority. This shows that the demand for finding affordable products is still very high, creating an advantage for the development of this type in the coming year. Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn in the Southern region, also commented that apartments are the type that meets the real housing needs, the most popular in the current period with increasing demand, especially in the affordable segment.

For that reason, this is the type with the most optimistic market developments in 2023. While other types such as land, villas, and townhouses have all experienced a decline in liquidity and selling prices, and even had to continuously cut losses, apartments are still sought after by many people and recorded positive changes in search demand.

Condominiums, more specifically apartments with affordable prices, suitable for the majority of homebuyers' incomes, developed by reputable investors will still be sought after and actively traded in 2024.

Mid-range apartments are still at the forefront of real market demand.

However, the decisive factor to create a breakthrough for apartments in the new cycle is the selling price. According to the forecast of the Vietnam Association of Realtors (VARS), in 2024, the selling price of primary apartments will continue to increase by an average of about 3 - 8%. The reason is that the supply cannot be resolved in the short term.

The scarcity of new supply makes the market less competitive, businesses with apartment projects opening for sale at this stage will have many advantages. Therefore, if there are no difficulties in cash flow, investors will continue to keep prices high to maximize profits. At the same time, the constantly improving infrastructure will continue to push the price level higher.

Statistics show that the number of newly licensed commercial housing projects is very small and is on the decline, especially in the affordable and mid-range segments. Specifically, according to data published on housing and real estate market by the Ministry of Construction, in 2022, the country had 126 newly licensed projects, only 52.7% compared to 2021 and 17% compared to 2020.

The market will grow but it is difficult to have a breakthrough due to the difference in supply and demand.

Notably, there are no future housing projects in the affordable segment (priced below VND25 million/m2) eligible for capital mobilization and housing transactions in 2021 and 2022. The proportion of mid-range apartments (VND25-50 million/m2) eligible for capital mobilization and housing transactions has also continuously decreased by double digits since 2020.

VARS research data also shows that the number of affordable and mid-range apartments for sale has been continuously decreasing since 2019. Specifically, the total number of affordable apartments for sale in 2022 is only 10% compared to 2019. The proportion of affordable apartment supply in the total supply has also continuously decreased, from 30% in 2019 to 7% in 2022.

In addition, apartment prices will increase because investment, construction, materials and labor costs are expected to increase. Along with a series of other costs arising from the initial investment and construction, it also makes it difficult for this type of apartment to reduce prices.

In addition, according to a survey by Batdongsan.com.vn, home buyers in the new period will be "more demanding" when choosing products, more demanding with investors, so liquidity will be good but there will be no breakthrough. 2024 may just be the starting stage, promoting the development of projects with complete legal documents, helping reputable investors recover after a difficult year.

Source: https://www.congluan.vn/thi-truong-can-ho-chung-cu-se-but-pha-trong-nam-2024-post278504.html