Real estate transactions remain sluggish.

A newly released report by the Dat Xanh Services (DXS - FERI) Institute for Economic , Financial, and Real Estate Research shows that in the third quarter of 2023, approximately 38,000 primary residential real estate products were launched onto the market, with 90% coming from existing projects, mainly concentrated in the North (around 14,000 products) and the South (around 17,500 products). However, the absorption rate was quite low, only reaching 10%-20% of the total supply.

In the land plot segment, Danh Khoi Group reported that in the third quarter of 2023, the Ho Chi Minh City market and surrounding areas only saw 6 projects launched with approximately 271 plots, equivalent to 21% of the same period last year. The sales rate reached 25%, only 12% compared to the same period.

The new supply of townhouses and villas in the quarter was only 144 units from 4 projects, just 5% compared to the same period last year. The sales rate was only about 28%, equivalent to 40 units. Most transactions were concentrated in products priced under 10 billion VND/unit. According to Danh Khoi Group, the general difficulties of the market and macroeconomic fluctuations have affected customer sentiment, resulting in sales transactions not meeting expectations.

A representative from Danh Khoi Group also stated that recently, developers have had to extend the reservation period for newly launched projects by an average of 3-5 months, as well as continue offering discounts for quick payments, extended payment terms, and launch gifts… to stimulate market demand.

Currently, transactions involving land plots and townhouses in new projects in Ho Chi Minh City are mainly secondary transactions within older projects.

Further elaborating on the low absorption rate in the real estate market, Neil MacGregor, General Director of Savills Vietnam, stated that amidst the challenging market conditions, developers continue to maintain a cautious approach, limiting marketing activities and postponing the launch of new projects until next year. Some developers with projects to launch are forced to implement a range of preferential sales policies and diverse loan options, along with new rental commitments, in order to attract buyers.

Conversely, real estate buyers are even more cautious, despite interest rates having fallen to their lowest levels since 2020. A survey conducted by Dat Xanh Services on whether they would consider buying real estate if interest rates fell showed that only 26% answered "yes"; 31% responded "no"; and 43% were undecided.

Dr. Pham Anh Khoi, Director of DXS - FERI, believes that all market participants are currently in a "dilemma." The government has to lower interest rates to stimulate production and business, but also must balance this to avoid impacting the exchange rate and the safety of the system. Manufacturing, business, and service enterprises are also facing the dilemma of whether or not to borrow. Real estate businesses are facing both a shortage of capital and the uncertainty of a market that has not fully recovered. Therefore, they are choosing to wait, making it difficult for liquidity to increase. "In the real estate industry, buyers usually wait for the market to warm up before buying, but currently they lack confidence. Real estate investment does not have a quick capital turnover, and selling is not as easy as with stocks, so investors will choose to wait to see the impact of policy adjustments. We predict that the impact of these policies will not become clearer until the end of 2023," Dr. Khoi observed.

The cash flow is "stuck".

According to Dr. Le Dat Chi, Head of the Corporate Finance Department at the University of Economics Ho Chi Minh City, there are many reasons to explain the low demand for real estate, including the fact that many investors' money is "stuck" in unfinished real estate projects – money has been paid but the houses are not yet built; many people are entangled in corporate bonds and have not found a way out. Therefore, for the real estate market to recover, the issues of cash flow and investor confidence must be addressed...

Source: https://nld.com.vn/kinh-te/giao-dich-bat-dong-san-van-i-ach-20231016212642082.htm