Real estate prices are difficult to decrease because of lack of supply
According to the Vietnam Association of Real Estate Brokers (VARS), in 2023, the total housing supply in the country will be about 55,329 products, an increase of 14% compared to the total number of products offered for sale in 2022. However, this supply is only equal to 32% compared to 2018, the year before the Covid-19 epidemic, with 180,000 products.
Notably, the real estate structure on the market is increasingly unbalanced. The market lacks affordable commercial housing. The proportion of affordable apartment supply to the total supply of apartments for sale also continuously decreased, from 30% in 2019 to 6% in 2023.
The supply of apartments priced under 25 million VND/m2 only comes from social housing projects and commercial housing projects in provinces and cities of class 2 and 3 urban areas.
Real estate supply is still unlikely to increase rapidly in the near future. Photo: Gia Linh
Notably, the mid-end segment is also starting to be scarce in two special urban areas, the supply of apartments priced at 40 million VND/m2 is almost only available in the provinces surrounding Ho Chi Minh City.
In 2023, the supply will record the highest level in the mid-end apartment segment, accounting for about 40%, followed by low-rise products at about 24%, land plots and luxury apartments accounting for 22%. Super luxury and affordable apartments account for an equivalent proportion of 5%.
Experts assess that in the short term, supply is still unlikely to increase. Because the number of newly licensed commercial housing projects is very small, and is increasingly on the decline, especially in the affordable and mid-range segments.
Legal bottlenecks make State management agencies more cautious in approving projects. Legal problems also cause businesses to have difficulty in output, without resources to repay debt and develop new projects.
Many real estate segments will continue to increase in price
The average price of a primary apartment in Ho Chi Minh City is 71 million VND/m2. Photo: Gia Linh
VARS experts say that real estate prices have begun to maintain stability after price drops in the first half of 2023. Some segments have shown signs of bottoming out, and moving sideways since the third quarter of 2023.
Entering 2024, Mr. Nguyen Van Dinh – Chairman of VARS forecasts that apartment segment prices will remain high. However, the market will have more housing products at prices more suitable to people’s needs, mainly from social housing projects.
As for the land segment, prices will increase by about 5-7% compared to 2023 in large urban areas because supply will be scarce. As for developed areas with systematic infrastructure, they tend to go sideways.
In addition, industrial real estate will also grow strongly. Rents for high-quality industrial parks continue to have the opportunity to increase. Meanwhile, old industrial parks with degraded quality will have to compete a lot.
Lack of supply, prices of some real estate segments will increase. Photo: Gia Linh
Although the market will struggle throughout 2023, according to VARS, the apartment segment alone is not in a downward trend. Primary apartment prices in late-stage projects, or in subsequent subdivisions opened for sale in major urban areas, are continuously increasing. Only in the secondary market, apartment prices recorded a slight decrease, flatlining, but increased in the affordable segment.
Notably, the real estate market also recorded difficulties but house prices were relatively high compared to people’s financial capabilities. In particular, the average selling price of primary apartments in Ho Chi Minh City is 71 million VND/m2.