Experts explain why businesses do not reduce villa prices for sale

Ms. Do Thu Hang - Senior Director, Research and Consulting Department, Savills Hanoi said that the price of villas and townhouses has tended to decrease slightly in the last quarter of 2022, but the price adjustment will not be significant and this is also a challenging problem for both investors and individual investors.

According to Ms. Hang's analysis, the general price level of townhouses in the Hanoi market is still high. Villas in the Hanoi area priced from 10 to 30 billion VND account for 55% of the proportion, while prices above 30 billion VND also account for 20% of the proportion, and prices below 10 billion VND account for about 22%.

For current investors, the initial investment costs of investors are also higher. These costs include land costs, capital costs, and financial costs during the project development process due to problems that arise that cause costs to be higher than expected. For example, the story of the licensing and project approval process being prolonged, causing investment costs to increase, thereby affecting the price of the product.

In addition, in the secondary market, investors have also experienced many times of buying and selling, causing prices to be pushed up to high levels, leading to difficulties in making decisions on price adjustments.

For villas and townhouses, demand for this segment is still recorded at a high level but supply is limited. Demand also comes from high-income people, buying with a certain amount of idle money to invest in low-rise housing and using little bank financial leverage.

Therefore, there is no selling pressure in the context of high bank interest rates. This leads to the reason why the price decrease in this segment will not be completely obvious.

Real Estate - Experts explain why businesses do not reduce villa prices for sale — To solve liquidity difficulties, many investors have begun to have plans to transfer projects (Photo: Huu Thang).

Ms. Hang commented that in 2023, liquidity may improve but will focus more on products bought for living instead of buying for investment. Hanoi will need good quality projects at reasonable prices when the existing supply is at high prices and not attractive to buyers, especially when the market is facing competition from neighboring provinces such as Hung Yen and Bac Ninh with developing infrastructure and rapid urbanization.

In some other cases, to solve liquidity difficulties, many investors have started to have plans to transfer projects, causing mergers and acquisitions (M&A) activities to take place very bustlingly.

For investors with high determination and reasonable negotiation ability, this is one of the options to help purify the market. Purification will help the market have reputable investors, with experience, financial potential, overcome existing problems, for example, launching inappropriate products to the market, the price is raised but the products do not meet the requirements of users.

In terms of prospects, the market will have a supply of 1,600 units from 15 projects expected to enter the market in 2023. Hoai Duc district is expected to provide 20% of future supply, followed by Thanh Tri district with 16%, Long Bien district with 15%.

Mr. Matthew Powell, Director of Savills Hanoi, commented that new infrastructure projects will boost the housing market. When completed, projects such as Ring Road 3.5 and Ring Road 4 will support the development of more than 80 projects with more than 2,900 hectares in districts adjacent to Ring Roads such as Hoai Duc, Me Linh, Ha Dong, Dan Phuong, Thuong Tin. In addition, support policies and difficulties will promote market recovery in 2023 .

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