Real estate investors still "see a lot, buy little"

Although the real estate market is seen as recovering, with many sales and project introduction activities being carried out again, liquidity is still slow.

A recent market research report by Batdongsan.com.vn shows that in May 2024, the real estate market in Ho Chi Minh City had many changes in selling prices in some segments, but the demand for buying decreased and the demand for renting increased.

Specifically, the average selling price of apartments in Ho Chi Minh City is around 50 million VND/m2, an increase of 1 million VND/m2 compared to the previous April selling price. In particular, the selling price of street-front houses in Ho Chi Minh City has increased more strongly, from an average of 214 million VND/m2 in April 2024, to 217 million VND/m2.

The demand for searching and the number of real estate listings in Ho Chi Minh City increased slightly compared to the previous month. Accordingly, the demand for buying real estate in Ho Chi Minh City increased by 3%, the number of real estate listings increased by 9% compared to the previous month. The strongest increase in listings was in the private house segment (up 10%), apartments and land (both up 6%).

Villas are the type of property that recorded a 2% decrease in listings last month. This segment also recorded no new supply. Other types such as land plots and townhouses maintained a flat trend, while the number of searches for private houses and townhouses for sale decreased by 4% compared to the previous month.

In contrast to the demand for buying and selling, the number of rental searches continued to grow rapidly last month. Accordingly, the number of real estate rental listings increased in most types (apartments increased by 12%, townhouses and boarding houses increased by 8%, and offices for rent increased by 10% compared to April).

Explaining this phenomenon, Mr. Nguyen Thai Binh , CEO of Dong Tay Land Joint Stock Company, said that currently, due to the high demand for real housing, while the market is lacking in product supply, many people have to rent houses.

According to Mr. Binh, in good market years like 2018 - 2021, customers are not interested in the selling price (how much money per square meter), but rather how much money they need to spend first to buy real estate. Because when buying an apartment, customers pay 30% in advance, the remaining 70% is borrowed.

Then, to attract more investors, investors introduced a policy that customers only need to pay 25% in advance and borrow 75%, this ratio was then adjusted down in the direction of 20 - 80%, 15 - 85%, 10 - 90%. Even when the Covid-19 pandemic occurred, the market appeared the concept of buying a house for 0 VND, meaning customers do not need to pay in advance, there are at least 3 projects applying this policy.

However, when the market slows down, customers start to consider the selling price more carefully. For example, an apartment in Ho Chi Minh City with a unit price of over 50 million VND/m2, with 2 bedrooms and a price of over 3 billion VND, is certainly difficult to sell at this time, it must be under 2.5 billion VND/apartment to be easier to sell.

“At this stage, customers are very hesitant in choosing the smallest total price and when calculating the unit price, it must also be reasonable. This is a difficult problem for investors,” said the CEO of Dong Tay Land Joint Stock Company.

A survey by the Dat Xanh Services Institute of Economics - Finance - Real Estate (DXS-FERI) from new supply in the markets of Hanoi, Ho Chi Minh City, Binh Duong, Da Nang, Nha Trang shows that the number of apartments priced at 2.5 - 3.5 billion VND accounts for 27%; apartments priced at 3.5 - 5 billion VND account for 26%; apartments priced above 5 billion VND account for 24% and only 16% of apartments have a selling price below 2.5 billion VND. Meanwhile, up to 67% of more than 1,000 surveyed customers are interested in apartments priced below 2.5 billion VND.

In fact, investors cannot lower the selling price of new projects because investment costs have increased too much, including land costs, construction costs, investment costs, business implementation costs, financial costs, etc.

Predicting the direction of the real estate market's recovery, experts say that types of real estate that serve real housing needs will recover better than speculative types.

According to Mr. Ngo Quang Phuc, General Director of Phu Dong Group, from now until the end of 2024, purchasing power will still only focus on groups with real housing needs. There may be a small group of investors returning to the market, but not enough to create a breakthrough in liquidity. The recovery here will be strong in apartment segments with prices that are affordable for the majority. For example, social housing, mid-range and affordable apartments are inherently in great demand and are affordable for the majority of home buyers. Other types will be governed by the growth potential of the economy.

Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan.com.vn also said that real estate types that people actually live in such as apartments and private houses play a leading role in the market. However, the real estate market is still facing difficulties in cash flow and needs more time to resolve the problems.

“Currently, a lot of cash flow is in bonds and projects that have not yet resolved legal issues. Currently, policies are needed to stimulate cash flow into the market. The amount of savings deposits of people is still very large, and if this problem is not resolved, the market cannot fully recover. After resolving this issue, the market will truly enter a period of prosperity and stability,” Mr. Quoc Anh shared.

Source: https://baodautu.vn/batdongsan/nha-dau-tu-bat-dong-san-van-xem-nhieu-mua-it-d218270.html