Housing market still lacks supply

Difficulties in completing legal procedures have affected the development speed of real estate projects of investors.

DKRA Group's Q1/2023 real estate market report shows that the apartment market recorded 9 projects opened for sale in this first quarter with about 1,378 units, mainly concentrated in Ho Chi Minh City and Binh Duong. New supply decreased by 59% compared to the same period in 2022. New consumption reached about 864 units, equivalent to 63% of new sales and decreased by 66% compared to the same period last year. Notably, Class B apartments became the main segment leading the market when accounting for 56.2% of total supply, mainly concentrated in the North of Ho Chi Minh City.

For the resort real estate segment, there has been a decline in both supply and consumption, and the primary selling price level has not fluctuated much. Many investors have continuously postponed the sales launch time to adjust the selling price and introduce appropriate sales policies. In this resort segment, the new supply received 42 units from 2 projects opening for sale in the next phase. Market demand recorded the lowest level in the past 10 years. In the townhouse and villa segment, the trend continued to move sideways, fluctuating around 350-400 units, mainly concentrated in Binh Duong, Dong Nai, and Ho Chi Minh City.

According to Cushman & Wakefield, the application of the new legal framework and the issuance of bonds still have an impact on the real estate market. Demand is showing the hesitation of buyers in the face of the risk of a global economic recession. Home buyers at this stage are mainly buyers for real residence and long-term investment, not short-term investors with the support of financial leverage as before.

Currently, the average primary apartment price in the first quarter of 2023 has decreased slightly by 2.9% compared to the fourth quarter of 2022, reaching about VND 75 million/m2. Cushman & Wakefield believes that this decrease in selling prices is mainly due to new launches from mid-range to high-end projects, while the product basket in the fourth quarter of 2022 witnessed more launches from high-end and super luxury projects.

"The gloomy economic situation as well as difficulties in completing legal procedures have affected the speed of project development of investors. This trend also affects future supply as investors are likely to delay new launches, with the expectation of market recovery in the near future," Cushman & Wakefield analyzed.

Commenting on housing supply, Mr. Nguyen Van Dinh - Chairman of the Vietnam Real Estate Brokers Association said that the liquidity of the real estate market has bottomed out over the past months, causing many investors to continuously postpone the launch of new products as planned. Many businesses continue to wait for signals from the real estate market, many individual investors wait for solid investment opportunities, and many projects have to "sit still" waiting for solutions... causing a shortage of new supply. It is forecasted that in the second quarter of 2023, there will be more legal documents to remove difficulties for projects waiting to enter the market, providing new supply to the market.

DKRA Group forecasts that in the second quarter of 2023, the real estate market will have a significant recovery but it will be difficult to make a sudden change in the short term. In particular, the supply of land plots will increase slightly, fluctuating around 450-600 plots, mainly concentrated in Binh Duong, Long An, Dong Nai. In the apartment segment, the supply may double, reaching 2,000-2,500 units. At the same time, information about the State Bank's loosening policies and lowering interest rates will increase the overall demand of the real estate market but it will be difficult to make a sudden change in the current period.

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