Villas and townhouses have seen a 30% drop in price compared to their peak.

Prior to the market "freeze," townhouses, villas, and shophouses were highly sought after by investors and saw extremely active transactions in the secondary market. However, recently, due to a sharp decline in demand, products in this segment have received less investor interest.

According to VARS, real estate products valued at over 20 billion VND, such as townhouses and villas, have seen price reductions of up to 30%, although these prices are still higher than the developer's selling price. Many investors are accepting lower prices to recover capital and invest in other channels or types of properties more suitable for the current market, or to repay loans to reduce financial pressure.

However, according to many experts, although the supply of this type of property has seen virtually no new products recently, liquidity has not improved. Properties priced above 10 billion VND are very difficult to trade, and there is very little investor interest.

Townhouse villas have recorded a 30% reduction compared to Figure 1. — Villas and townhouses were once a segment that attracted many investors.

According to observations, some properties at this price point have been listed for sale since the beginning of the year but have yet to attract any buyers. Even an investor who owns two shophouses in a coastal project has offered to sell them at a price close to the developer's original purchase price, but due to various project factors such as legal issues and loan requirements, no one is interested.

According to Mr. Dinh Hoai Phuong, the owner of a real estate brokerage company in Ho Chi Minh City: "Our clients have been listing five shophouses and several high-end villas for sale since the end of 2022. In the last three months, we've received some inquiries, but they're still only at the informational level."

According to Mr. Phuong, there are many reasons why buyers are not enthusiastic about these high-priced products, including unattractive discounts, low potential for price appreciation, and a lack of short-term profitability. Currently, investing in real estate still carries many risks, so many investors are hesitant to take the plunge with high-priced properties, not to mention that the prices of many projects have been inflated after changing hands 3-4 times in the secondary market.

Notably, at present, market demand is coming from buyers with genuine housing needs. For this group, affordable or mid-range products, whose prices haven't been pushed too high compared to the market, are preferred. Therefore, for the liquidity of the townhouse and villa segment to recover, we still have to wait until early 2024, when the market becomes more active again or mortgage interest rates fall to a level attractive enough for investors.

The fact that cash flow has not yet returned to the real estate market is also a problem that is causing the high-priced villa segment to not receive much attention.

According to recent research by Batdongsan.com.vn, when discussing expectations for home loan interest rates in 2023-2024, those with low to medium incomes consider a home loan interest rate below 8% to be reasonable for them to manage their finances, and expect interest rates to fall to this level in 2024. However, according to experts, bank interest rates will likely decrease in the second half of 2023, but the reduction may not be as significant as homebuyers expect.

According to Mr. Vo Huynh Tuan Kiet, Director of the Housing Market at CBRE Vietnam, lowering interest rates in the market requires not only a reduction in the policy interest rate but also abundant Vietnamese Dong liquidity. Reducing lending interest rates still depends on the proactive approach of commercial banks. For a reduction in deposit interest rates to impact lending rates, there needs to be a certain time lag; it could take 4-6 months from the time deposit interest rates decrease before lending rates can follow suit.

Currently, despite a decrease in fluctuating interest rates, floating interest rates at many commercial banks still range from 13.5% to 14%, and some banks even offer rates as high as 15%. From now until the end of the year, even if home loan interest rates decrease, the lowest rates will still likely be in the range of 12% to 13.5%.

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