Townhouses are still difficult to sell even with price reductions.

Continuous price reductions

According to Thanh Nien newspaper's investigation, in recent months, the number of individual townhouses in areas that were once considered prime real estate and hard to find, such as District 7, Phu Nhuan District, Binh Thanh District, and Tan Binh District, being offered for sale at discounted prices has increased sharply. Notably, while there are many sellers, the number of buyers is quite small.

Ms. Phuong Di (a resident of Nha Be District, Ho Chi Minh City) said that for almost a year now, she has been trying to sell her 3-story house, with a land area of ​​140 m2, at a price reduced from 13 billion VND to 12 billion VND. Despite many potential buyers viewing the house and praising its beauty and good price, the transaction remains unsuccessful. In addition to lowering the price, Ms. Phuong Di said that if a buyer is serious, she will give away all the furniture. If the buyer doesn't want the furniture, she will deduct the cost from the selling price.

"Many customers have come to view the house. Everyone praises its beauty and good price, but the large sum of money makes them hesitant. Because if they buy, they have to take out a bank loan, and few people have such a large amount of cash on hand these days. However, with the current economic recession and reduced income, having to borrow from the bank to buy a house is discouraging for customers," said Ms. Phuong Di.

Many townhouses are still struggling to find buyers despite price reductions.

In Tan Binh District, Mr. Tuan is selling his 42 m² single-story house on Ly Thuong Kiet Street for an initial price of 4.3 billion VND, but has now reduced it by 800 million VND to 3.5 billion VND. Despite listing it with numerous real estate agents and advertising it everywhere, the house remains unsold. Not far from Mr. Tuan's house, also on an alley off Ly Thuong Kiet Street, Ms. Diem is selling her own single-story house for 3.8 billion VND, with room for negotiation.

In Tan Thuan Ward, District 7, a house with an area of ​​nearly 30 square meters was listed for sale at 5 billion VND in early 2023, but no one bought it. Now, the owner has reduced the price to 4 billion VND, but it still hasn't sold, even though the house is newly built and accessible by car. According to Mr. Trong, a real estate investor in District 7 and Nha Be District, many investors have been forced to sell properties at relatively low prices recently. However, with the current economic difficulties and cash shortages, everyone is holding onto cash for security.

"Right now, anyone with cash or seed capital can borrow from banks to buy distressed properties, waiting for the real estate market to recover. I'm also hunting for prime properties where the owners are burdened by bank loans to rent them out or to buy resort properties for business. Bank loans currently have interest rates of around 6-7% per year. If you borrow for two years, the interest rate is around 12-14%, and many banks even offer lower rates. Meanwhile, the prices of many properties for sale have decreased by 10-20%, or even more, compared to the general market average. Therefore, if someone has cash and doesn't need to borrow from a bank, or even borrows a small amount, to hold onto those properties, they will definitely make a profit when they sell them later. Especially properties on prime locations that can be rented out. Rental income can cover a portion of the interest," Mr. Trong calculated.

The market will recover in the second quarter.

According to most experts, the townhouse segment in existing residential areas in Ho Chi Minh City is currently facing liquidity difficulties despite sharp price drops. Real estate expert Tran Khanh Quang analyzed that townhouses valued at 20-30 billion VND are often difficult to sell even with price reductions. Meanwhile, those priced at 5-7 billion VND are less attractive to buyers due to difficulties in renting out the space. While in previous years, the market saw good transactions towards the end of the year, it remains quite sluggish. This is because most townhouse buyers are investors looking for rental income and price appreciation. However, these individuals already own multiple properties, and investors themselves are struggling to sell, making further purchases difficult.

If the price of a street-front townhouse drops by 30-40%, it might sell immediately, but a small reduction will still make it difficult to sell. Properties that can be rented out and generate cash flow are easier to sell and more sought after; or service buildings and office buildings that reduce prices by about 20% will sell immediately. Small townhouses with 2-3 floors are very difficult to sell.

Real estate expert Tran Khanh Quang

"If the price of street-front townhouses drops by 30-40%, they can be sold immediately, but if the price drop is only a small amount, they will still be difficult to sell. Properties that can be rented out and generate cash flow are easier to sell and more sought after; or service buildings and office buildings that reduce prices by about 20% can be sold immediately. Small townhouses with 2-3 floors are very difficult to sell. Currently, there are positive signs, many people are viewing properties, many want to buy, but they are still hesitant, fearing that the economy is still struggling and the market has not yet recovered," Mr. Tran Khanh Quang predicted.

Meanwhile, regarding the reasons why townhouses are experiencing price reductions but still have few transactions, Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn in the southern region, believes there are four factors. Firstly, low-rise real estate properties are significantly more expensive than the average income of the population. Purchasing one requires a large sum of money and often necessitates borrowing. Given the current economic downturn affecting income and high interest rates, this segment will attract fewer buyers.

Next, there is currently a trend towards seeking spacious and safe living spaces. For that price, going a little further to the suburbs allows you to buy a larger house with better space, area, scenery, and infrastructure. Another group chooses apartments for living with full amenities and safety instead of being crammed into narrow townhouses. Finally, the return on investment for this type of property is not as high as expected. The demand for renting private houses is lower than for apartments, and the current rate of price increase and investment returns is no longer as fast as for land plots and townhouses in satellite areas; leading to a decrease in investment demand for this product group.

Most opinions also acknowledge that although bank lending interest rates have fallen sharply and the market is on the path to recovery, investor sentiment remains cautious, continuing to wait for further price drops, leading to decreased liquidity. Typically, a sluggish real estate market coincides with a difficult economic period, so people tend to hoard cash or deposit it in bank savings. Therefore, the recovery of liquidity in this segment depends on the profit margin, access to bank capital, and the possibility of further interest rate reductions. Many believe that with the economy recovering and interest rates falling sharply, this segment may become active again in the second quarter of 2024.

According to statistics from the online real estate listing website batdongsan.com.vn, in the third quarter of 2023, the average asking price for this type of property decreased by 3-6% compared to the previous quarter. Specifically, prices in Binh Thanh District decreased by 1%, Binh Tan District by 6%, Tan Binh District by 2%, Tan Phu District by 2%, Thu Duc City by 5%, District 12 by 2%, etc.

Source link: https://thanhnien.vn/nha-pho-giam-gia-van-kho-ban-185240122225653416.htm