The villa and townhouse real estate market is expected to boom in 2024.

A sharp decline in 2023

While the real estate market is affected by the overall economy , the villa and townhouse segment is not immune to this fate. Investors are gradually turning their backs on this segment as cash flow stagnates and liquidity stagnates.

According to DKRA Group, in 2023, the supply of new townhouses/villas in Ho Chi Minh City and its surrounding areas saw a sharp decline compared to 2022. Over the four quarters, the market received only 907 townhouses/villas from 28 projects, a decrease of 87% compared to the previous year. Among these, markets such as Ho Chi Minh City and some neighboring provinces experienced the most significant drop in supply.

The supply of villas and townhouses decreased in 2023.

New market consumption was very low, at approximately 315 units, equivalent to 35% of the new supply, only 8% compared to 2022. Transactions mainly occurred in the mid-priced product group from 1.9 to 2.4 billion VND/unit and were concentrated mainly in the first six months of the year.

Ho Chi Minh City and its surrounding areas account for approximately 47% of the total supply and 45% of the total new consumption in the entire market.

Another market research firm, JLL Vietnam, also noted that the supply of villas and townhouses in Q4 2023 reached only 180 units, hitting a record low in the past ten years. The main reasons stemmed from developers delaying project launches amidst a weak market; and partly from delays in legal procedures or construction progress for projects that did not yet meet the conditions for signing sales contracts.

Regarding absorption rates, the unit recorded a limited number of transactions with 58 units sold in Q4 2023, a decrease of 74.8% compared to the same period last year. The absorption rate in the quarter improved but remained low at 15.1%, while the absorption rate for the year only reached 30.9% (a decrease of 60 percentage points year-on-year).

The low liquidity of the villa and townhouse segment is attributed to the overall impact of the market economy.

According to data from the Vietnam Association of Real Estate Brokers (VARS), in 2023, land plots and high-value villas/townhouses were subject to price cuts of 30-40% compared to their peak prices. However, this situation has been largely controlled and is gradually stabilizing over time. In localities showing clear signs of recovery, selling prices for these segments have leveled off, and in some places even increased slightly by 3-5%.

Despite the unfavorable overall economic situation and difficulties in the real estate market, prices are still considered relatively high compared to both their true value and the financial capabilities of the people.

Market expectations for the end of 2024

According to Nguoi Dua Tin , 2023 was a difficult year for the villa and townhouse segment, with limited product supply due to numerous legal obstacles and tightened lending. This resulted in a lack of liquidity in the overall market, especially for the villa and townhouse segment which requires very high financial resources.

However, with the government implementing various policies to stabilize the real estate market, and the State Bank of Vietnam reducing deposit and lending interest rates to facilitate cash flow circulation, many experts believe that the real estate market will recover, with the villa and townhouse segments returning to their normal trajectory.

DKRA Vietnam forecasts a slight increase in new supply and demand for townhouses/villas, reaching approximately 1,200-1,500 units. Markets in provinces bordering Ho Chi Minh City are likely to lead in new supply.

In particular, products with completed legal procedures, projects with completed infrastructure, and developed by reputable investors will receive significant customer interest. Primary market selling prices are expected to remain stable in 2024. Simultaneously, many investors will continue to implement policies to stimulate the market.

Speaking to Nguoi Dua Tin (The Informer), Mr. Nguyen Duc Luan (a consultant residing in Thu Duc City, Ho Chi Minh City) said that customers are currently very selective when researching and purchasing villa and townhouse projects. Although the overall market is slow and liquidity is poor, many buyers have been purchasing since the end of 2023 and the beginning of 2024.

However, prices will show a more significant difference compared to the market's "peak". According to Mr. Luan, this segment is always sought after by affluent customers, and in 2024, villas and townhouses will still be among the most popular real estate products.

Townhouses worth tens of billions of VND in Thu Duc City, Ho Chi Minh City.

Ms. Pham Thi Nguyen Thanh, General Director of Dat Xanh Services, commented: “Villa and townhouse real estate is one of the most developed and leading investment channels in the segment and has stimulated market demand for many years. In 2023, limited supply and poor liquidity affected this segment.”

However, with the easing of legal regulations and the emergence of supply in Ho Chi Minh City and neighboring provinces, the villa and townhouse market will improve and become more vibrant from the first or last half of 2024.”

Sharing the same view, Ms. Trang Le, Senior Director of Consulting and Research at LL Vietnam, assessed that the villa and townhouse market will see an improvement in supply in 2024.

“Through this purification process, the internal health and adaptability of market participants to difficulties and challenges will be enhanced. Although the changes in the new law have not yet been implemented, they will be a positive signal for participants to place their trust in and revitalize their spirit for the upcoming period. In 2024, real estate businesses will also have many new strategies to bring products to the market.”

Source: https://www.nguoiduatin.vn/bat-dong-san-biet-thu-nha-pho-duoc-ky-vong-but-pha-trong-nam-2024-a644305.html