Real Estate Market Likely to Recover More Strongly in Q3

Though the real estate market is quite lackluster, affordable products are still well-received. Many businesses have also planned to develop and build more low-priced housing projects.

Hanoi still faces shortage of affordable housing

According to data from Batdongsan.com.vn (operated by PropertyGuru Group), in the first four months of 2023, apartment prices in big cities such as Hanoi and Ho Chi Minh City moved sideways. Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan.com.vn, said that apartment prices will be unlikely to fall sharply because highly demanded segments will still be sought.

Saying that real demand plays a key role, Mr. Vo Hong Thang, Deputy Director of Research & Development (R&D) at DKRA Vietnam, said that most projects for real demand are still sold well (accounting for over 70% of the shopping basket) in an average time of 2-3 months. Apartment liquidity can be motivated by affordable housing projects with selling prices below VND50 million per square meter in Ho Chi Minh City and less than VND35 million per square meter in Binh Duong in 2023.

The demand of both end buyers and investors in mid-range apartment projects is huge in the market, especially the demand for affordable social housing for low-income earners. According to the Ho Chi Minh City Real Estate Association, buyers of Grade C apartments still outnumber other segments, accounting for 70-80% of the market share and this situation is forecast to continue until the end of 2023.

To meet the market demand, the Government has improved the housing supply for low- and middle-income people, specifically the project to build 1 million social housing units for workers and the credit package of VND120 trillion to develop social housing projects for workers.

In the coming time, localities, especially Hanoi and Ho Chi Minh City, will focus on urging project investors to invest in building houses and urban areas in order to fulfill housing development targets and promote the development of satellite towns. They will also focus on developing a variety of housing types, with a focus placed on affordable apartments, condominiums, rental houses, and accommodations for workers in industrial parks to meet the housing needs of people with different income levels.

Specifically, Hanoi set a target that the housing area per capita will reach 28.2 square meters in 2023, with a total floor area of 6.965 million square meters. Individual houses will account for 4.5 million square meters and project-based housing will account for 2.465 million square meters (including 2.339 million square meters of commercial housing; 0.032 million square meters of social housing, and 0.094 million square meters of resettlement housing).

Ho Chi Minh City recently launched a housing development program for the 2021-2030 period, with a proper land fund for social housing projects. The city currently has a 20% land fund for social housing and affordable housing for low-income earners in 25 land plots to build commercial housing projects with a total area of 57 ha, including 20 projects in Thu Duc City, three in Binh Tan district, one in Binh Chanh district and one in District 7.

In fact, many affordable housing projects have also been licensed. According to the Hanoi Department of Construction, seven housing projects have been licensed in Dong Da, Thanh Xuan, Nam Tu Liem, Long Bien and Thuong Tin districts. Among them, one project is social housing.

According to DKRA Group, in HCM City, the supply of residential land in the second quarter of 2023 will slightly increase from the previous quarter, ranging from 450 to 600 plots. The new supply in the second quarter may double that in the first quarter, at 2,000 - 2,500 units. Binh Duong, Long An and Ba Ria - Vung Tau will have 500 - 1,000 units, 200 units and 350 units, respectively.

According to experts, in the coming time, the market will be less gloomy as legal bottlenecks are removed, the support package of VND350 trillion for the Economic Recovery and Development Program was approved and interest rates were slashed. These factors promote the real estate market to gradually recover and develop strongly.

With an optimistic view of the market, Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn in the South, said that the most difficult time of the real estate market has passed. “According to the data we have, suppliers and buyers are increasing,” he said.

Sharing the same opinion, Ms. Nguyen Thi Thu Huyen, Vice President of Newstar Group, also forecast that “The market will have better signals by the end of the second quarter than now, will recover more strongly in the third quarter and grow more robustly in the last quarter of this year.”

By Huong Ly, Vietnam Business Forum