Many developers are 'racing' to offer discounts in the period leading up to Tet (Lunar New Year).

According to a recent report by DKRA, new supply and primary supply across the market decreased, by 60% and 68% respectively compared to 2022, the lowest levels in the past five years. Projects were concentrated in Ho Chi Minh City and Binh Duong . Market demand saw a slight increase in the second half of the year, but overall for 2023, the absorption rate only reached approximately 44% of the total primary supply, the lowest compared to the average of 2020-2022 (ranging from 68% to 87%).

Primary market consumption is concentrated in mid-range projects priced from 40-55 million VND/m2, with completed legal procedures, rapid construction progress, and convenient connectivity to the city center. Primary selling prices have not fluctuated much compared to the beginning of the year; however, developers have promoted various policies such as discounts for quick payments, grace periods for principal and interest payments, etc., to stimulate buyer demand. Meanwhile, secondary market liquidity remains low, with selling prices generally decreasing by 3% - 8% compared to the end of 2022, mostly in projects that are in the legal completion phase or experiencing construction delays.

Many investors participated in the discount race in the period leading up to Tet (Lunar New Year) (Figure 1). — Many developers are offering huge incentives before Tet to boost sales.

Observations from Ho Chi Minh City recently show that many developers have implemented unprecedented preferential policies for homebuyers, offering discounts and promotions. For example, at a condominium project in Binh Chanh (Ho Chi Minh City), the developer is currently offering a new selling price of 46 million VND/m2, a reduction of 4 million VND compared to the initial launch price in June. Furthermore, this developer is also applying a fixed interest rate of 6% for the first two years and extending the payment schedule.

In the eastern part of Ho Chi Minh City, a component project within a larger urban complex is also offering a massive incentive program with 0% interest for 3 years on 70% of the contract value. In addition, homebuyers receive an interior design support package worth over 300 million VND and 5 years of management fees. Furthermore, buyers investing in rental properties are guaranteed a rental income of 25 million VND per month for 2 years.

Besides the aforementioned huge incentives, the Ho Chi Minh City market also saw many other sales programs and policies maintained since the market freeze, including discounts of over 10% for cash buyers, grace periods for principal repayment, and preferential interest rates. These policies are part of the strategies to revitalize the market, which is currently experiencing a supply shortage to meet real housing needs in Ho Chi Minh City.

Similarly, in the Binh Duong market, an apartment project in Thu Dau Mot City is offering a special promotion: "Zero deposit, 0% interest, pay 10% and move in immediately." This policy has created opportunities for young customers to easily own a home without facing significant short-term financial pressure.

Also in this market, a project in Di An City has offered a discount of over 11% for customers paying in full, and customers only need to prepare 180 million VND upfront to own a 2-bedroom apartment. In addition, the project developer also commits to renting back the apartment for 10 million VND/2-bedroom unit for the first two years.

Many investors participated in a discount race in the period leading up to Tet (Figure 2). — The Binh Duong market has seen stable liquidity thanks to preferential policies and affordable prices.

Regarding the year-end rush to offer incentives, many experts believe this is a necessary adaptation to the market situation. Especially during the end of the year, many developers must introduce policies to compete for customers looking to buy homes. Policies such as 0% interest rates and extended payment schedules are essential, as commercial banks only offer preferential interest rates for a year or so.

According to Ms. Trang Bui, General Director of Cushman & Wakefield Vietnam, many developers are adjusting and offering attractive sales discounts. When real estate liquidity is good, it's difficult to have such favorable policies for buyers as currently. Therefore, if you're buying a home for personal use, this is the best time. It is predicted that after the second quarter of 2024, when the apartment market recovers, the current sales policies of developers will no longer be available.

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