Real estate prices are constantly increasing
Data from the Vietnam Association of Realtors (VARS) shows that over the past 10 years, real estate prices have increased dozens of times. In 2021 alone, the average house price grew by double digits, even many times higher than the same period last year. Low interest rates and record high inflation are factors contributing to the sharp increase in house prices, but the core of the problem is the decline in supply.
In particular, since 2018, policies related to capital sources and decisions of agencies and departments in controlling the real estate market have caused a serious decline in the supply of residential real estate. The demand for housing is constantly increasing, putting "pressure" on the supply, pushing real estate prices to continuously establish new levels.
Many abandoned villas in Nam An Khanh urban area (Hoai Duc, Hanoi ) have continued to increase in price over the past years (Photo: Ha Phong).
Regarding this issue, according to statistics provided by market research companies, in the long period from 2015 to present, the increase in apartment prices in Hanoi and Ho Chi Minh City has exceeded the increase in people's income. After 8 years, apartment prices in Ho Chi Minh City and Hanoi have increased by 82% and 56% respectively, while the income of people in urban areas has only increased by 39%.
A recent report by DKRA Group shows that in terms of new apartment prices, Ho Chi Minh City is still the most expensive place with the lowest price being 58 million VND/m2, the highest being up to 312.7 million VND/m2. Coming in right behind is Ba Ria - Vung Tau , with the lowest recorded price being 47.3 million VND/m2, the highest being 51.3 million VND/m2.
The selling price level in the primary market has not fluctuated much, but in the secondary market, some transactions still recorded a decrease of 50-150 million VND/unit, concentrated in projects with slow handover progress and expired grace period for principal and interest.
Real estate prices still rising, but slowly
In addition, according to VARS estimates, each year, Vietnam will have a shortage of about 300,000 housing units due to the emergence of new urban households, especially from the need to "live separately" of the young generation separating from extended families.
As a result of this shortage, home prices will rise even higher. However, this shortage is not across all segments, meaning that not all types of real estate will be affected in the same way.
In fact, the shortage of supply only occurs in certain areas and segments. Notably, while the supply of residential real estate, especially affordable housing, is and will likely continue to be in short supply in the future, the type of resort real estate with great value is present in the inventory of most real estate "giants".
Speaking to Dan Tri reporter, Mr. Nguyen Van Dinh - Chairman of VARS - said that real estate is a highly localized product, prices will increase at different rates in different regions and markets, mainly depending on the balance of supply and demand. However, in general, housing prices may not increase much in 2024.
In fact, drastic solutions to remove difficulties for the real estate market have been effective. The supply side of the market has accessed credit capital. However, housing loans are gradually decreasing. Because in the difficult economic context, home loans to serve real housing needs are not the top priority of people at the present time.
Furthermore, the existing supply in the market is not suitable for the needs and financial capacity of the majority. At the same time, the "strict" and difficult-to-satisfy lending conditions, along with the risky investment and business environment, force investors to be more cautious, causing the number of potential customers participating in the market to decrease.
However, he predicted that the apartment segment in big cities will continue to increase steadily because the supply has not yet adapted to the needs of customers and investors. At the same time, most of the upcoming projects in Hanoi and Ho Chi Minh City are located in districts far from the center, where land funds are still abundant. The constantly improving infrastructure will continue to push the price level of these projects higher in the future.
Real estate prices are expected to continue to increase next year, but not much (Illustration: Ha Phong).
Mr. Vo Hong Thang - Deputy Director of Research & Development of DKRA Group - commented that the current challenges of the real estate market mainly revolve around interest rates, although on a downward trend, they are still at a high level. Market demand is low, and buyers are still cautious.
According to Mr. Thang, the imbalance in the structure of the product segment and the absence of affordable products have led to low transactions. "The market will have positive changes by the end of the fourth quarter of this year or at the latest in the first half of 2024 thanks to the fact that lending interest rates are decreasing and will continue to decrease in the coming time, along with legal relief policies starting to show positive signs," he optimistically predicted.
According to Ms. Nguyen Hoai An - Senior Director of Hanoi Branch, Head of Research and Development Consulting Department of CBRE - in the long term, the Vietnamese real estate market is still in a fast growing trend. The big driving force is urbanization, large housing demand and continued strong infrastructure development.
Therefore, real estate prices in general will continue to trend upward, despite possible temporary slowdowns due to the impacts of economic cycles as well as legal and capital issues.
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