The residential real estate industry report of VnDirect Securities recently released assessed that "the most difficult period of the market has passed and will gradually improve from 2024". Comment based on recent trading signals and interest rate situation.
Specifically, the absorption rate in the two main markets, Hanoi and Ho Chi Minh City, simultaneously improved in the last 6 months of 2023. In Hanoi, both new supply and sales increased clearly over the quarters, with the rate Absorbs over 100%. In Ho Chi Minh City, the number of apartments sold in the second half of the year was 101% higher than the first half of the year. Along with that, the absorption rate reached 108% compared to 59%.
Along with that, home buying demand is expected to improve in the coming months thanks to the average floating mortgage interest rate at commercial banks currently about 11% per year, down from 13-14% per year. In addition, many investors with strong financial capacity have launched payment terms with preferential interest rates to support.
Apartments in Trung Hoa, South Trung Yen, Belt 3 areas (Hanoi). Photo: Ngoc Thanh
Real estate plays an important role in Vietnam's economy. Last year, this industry accounted for 21% of the total credit of the entire economy and 27,3% of GDP, according to VnDirect.
The housing market has entered a difficult period since the second quarter of 2022, after credit for the real estate sector was tightened, lending interest rates increased and a number of business leaders were punished for violations in the housing market. bond issuance activities.
Along with VnDirect, JLL Vietnam's 2024 market forecast also believes that the housing segment is "on the road to recovery". In Ho Chi Minh City, the Statistics Department said that the real estate business situation showed signs of recovery, with revenue in the first 2 months of 2024 estimated at 42.300 billion VND, up 20,1% over the same period (the same period decreased by 13%. ).
However, there are still a series of challenges present. In particular, supply has not improved in the short term. All last year, the supply of newly launched apartments in the country's two largest markets remained low, with 7.722 units in Ho Chi Minh City and 19.808 units in Hanoi. Primary townhouses dropped to their lowest level in 10 years, with 766 units in Ho Chi Minh City and 754 units in Hanoi, according to Savills data.
By 2024, JLL Vietnam forecasts that supply will still be at a historic low, only about 10.000 units in each market of Hanoi and Ho Chi Minh City. During the past decade, these markets sold about 40.000 new apartments per year at their peak.
Mr. Alex Crane, CEO of real estate consulting company Knight Frank Vietnam, explained that the supply is not positive because many investors have recently adjusted their progress and rescheduled project development to 2025 and 2026. Partly the reason is due to capital pressure.
For home buyers, the imbalance between supply and demand makes it difficult for people with real housing needs and finding affordable products. The government has set a target of building one million social housing units in the period 2021-2030. But by the end of 2023, the plan for the 2021-2025 segment has only gone 4,7% of the way, according to VnDirect.
Meanwhile, the average apartment price in Hanoi last year increased 15% over the same period, reaching 53,2 million VND per square meter (2 USD) due to a lack of supply in the affordable and mid-range segments. Meanwhile, the average apartment price in Ho Chi Minh City is 2.190 million VND per square meter (61,4 USD).
Ms. Do Thu Hang, Senior Director, Research & Consulting Department, Savills Hanoi, forecasts that the housing segment will continue to grow in price, due to increased land costs and construction costs. Infrastructure is developed and quality is improved. "The limitation in supply in the market still continues, leading to the average primary selling price of the entire market continuing to increase," she said.
