Apartment liquidity "breaks the ice" thanks to preferential policies

The dilemma faced by homebuyers.

According to market research firms, the demand for apartments in the first few months of 2023 increased significantly compared to the end of 2022.

It is clear that the demand for real estate among the population is always present, and even remains high in large, densely populated cities like Hanoi and Ho Chi Minh City. However, homebuyers are facing three challenges: supply, price, and financing.

In this context, supply and selling prices are closely interrelated. The imbalance between supply and demand, along with various factors related to prices, land availability, and legal issues, continues to push apartment prices higher.

Specifically, in the first quarter of 2024, the number of new apartments launched for sale in Hanoi decreased by 30% quarter-on-quarter, while the average primary selling price reached 52 million VND/ ^m² , a 22% increase year-on-year despite sluggish liquidity.

Regionally, the western part of Hanoi continues to be vibrant with high-end apartment projects, some with apartment prices comparable to those in central districts. For example: Masteri West Heights (Tay Mo, Nam Tu Liem - primary market) prices range from 60-80 million VND/ ^m² ; The Zei (My Dinh - secondary market) prices from 55-80 million VND/ ^m² ; The Matrix One (Le Quang Dao - secondary market) resale prices from 52-64 million VND/ ^m² .

Hoang Thanh Pearl (Nguyen Van Giap) is a rare primary market project currently on sale in the My Dinh area, offered at prices ranging from 50-53 million VND/ ^m2 despite its proximity to The Zei and The Matrix One.

Liquidity of apartments is facilitated by financial incentives and buyback commitments (Figure 1). — The high-end segment accounts for a large share of the supply in West Hanoi.

Located about 8 minutes from My Dinh, Moonlight 1 apartments in the Anlac Green Symphony urban area, which went on sale in April 2023, also offer competitive prices ranging from 39-45 million VND/ ^m² .

In southern Hanoi, prices are lower and there hasn't been much improvement in supply. In Hoang Mai district, some notable projects include Feliz Home (primary market) priced from 40-47 million VND/ ^m² , Hanoi Melody Residences (primary market) priced from 31-44 million VND/ ^m² , Rose Town (primary market) from 42-52 million VND/ ^m² , and Phuong Dong Green Park (secondary market) priced from 38-44 million VND/ ^m² …

Located in the heart of Tu Hiep Urban Area (Thanh Tri), just a 5-minute drive from Nuoc Ngam bus station, Tecco Garden is a rare primary market project in Hanoi with selling prices ranging from 25-28 million VND/ ^m² .

Currently, homebuyers have limited options when looking for apartments, especially those with reasonable prices. Many hope to buy a home now before prices continue to rise, but remain concerned about financing. Although bank loan interest rates have been adjusted downwards, most remain above 10% per year.

Developer launches "massive" policy to break the liquidity freeze.

Besides ensuring project progress, quality, and legal compliance, developers also understand that financial considerations are a crucial factor influencing customers' home-buying decisions.

Therefore, some developers have aggressively launched massive stimulus policies such as direct discounts on the selling price, support for loan disbursement with 0% interest for a certain period, or even a commitment to buy back the apartment.

In fact, these policies have actually yielded good results in terms of liquidity for primary projects. Notably, the Moonlight 1 apartment building (Anlac Green Symphony) in West Hanoi, despite only being launched at the end of April, has already recorded approximately 65 transactions – an impressive number, especially in the context of a market that has not yet fully recovered.

Liquidity of apartments in Pha Bang is facilitated by financial incentives and buyback commitments (Figure 2). — Moonlight Tower 1 has been topped out and the show floor has opened for visitors to tour.

Besides its green living spaces and impressive collection of amenities, Moonlight 1 also wins over customers with its flexible incentive policies. A highlight is the cumulative discount of up to 15% applied to the first 90 customers who place an order. With this policy, homebuyers receive a direct reduction of 500-760 million VND on the apartment price, suitable for those with readily available finances.

In addition, there are interest rate support packages for 18-24 months; the payment schedule is divided into 10 installments from now until the end of 2024.

Meanwhile, customers buying apartments at Hoang Thanh Pearl receive a 2.5% discount for early payment or a 0% interest rate for 12 months, with handover in Q1/2024. Although this policy is not groundbreaking, the project is still considered to have a good selling price compared to its potential, with significant room for further price increases.

Meanwhile, at the Tecco Garden project, the distributor, Dat Xanh Northern Vietnam, reported that just one month after implementing the policy of guaranteeing to buy back apartments after 18 months, 35 transactions had occurred, significantly increasing liquidity compared to the previous period.

Liquidity of apartments is facilitated by financial incentives and buyback commitments (Figure 3). — Even though the apartments have been handed over, buyers of Tecco Garden still enjoy many benefits.

Tecco Garden apartment complex has already been handed over and has ownership certificates. The remaining units are all 3-bedroom + 1 apartments ranging from ^127-141m² . Although there is still demand for these larger apartments, the high interest rates on home loans are making customers hesitant.

To stimulate demand, the project developer has offered three financial support options for customers to choose from. If choosing a bank loan, homebuyers will receive 0% interest for 18 months. If they have sufficient cash flow, customers can choose to pay in installments over 24 months or pay early to receive a discount of up to 9%.

Specifically, after 18 months of occupancy, if the customer is unable to pay the bank interest or feels the property is unsuitable, they can return the house and receive a full refund of their payments, with the developer covering the transfer fees.

With this policy, customers gain more than they lose because the initial down payment when buying a Tecco Garden apartment is 40%, equivalent to 1.2-1.5 billion VND. If deposited in a bank to earn interest, it would only yield about 7-8.5 million VND per month.

While the rental price for a 3-bedroom + 1 apartment at Tecco Garden currently ranges from 12 million VND/month upwards, with accumulated capital of 1.2 billion VND, customers buying an apartment at Tecco Garden at this time will have a place to live for 18 months without incurring financial risks.

In addition, Tecco Garden apartments are currently being upgraded to a high-end handover standard and positioned as "sky villas" for multi-generational families and those who prefer spacious living spaces, therefore a price increase is expected in the near future.

According to the developer's calculations, after the interest rate subsidy period, bank interest rates have cooled down, and customers no longer face the same financial pressure as before. However, if they wait until interest rates are lowered to buy a house, it is predicted that apartment prices will have already established a new price range.

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