Real estate market recovers positively

According to the report of the Vietnam Association of Realtors (VARs), the third quarter of 2024 in particular and the first 9 months of 2024 in general showed a positive recovery of the real estate market after a difficult period. Partly thanks to the stability of the economy and the Government's support policies.

In particular, the Housing Law 2023, the Real Estate Business Law 2023 and the Land Law 2024 officially took effect from August 1, 2024, 5 months earlier than the previous regulations, contributing to completing the legal corridor for the real estate market and opening a new cycle for the market in a safer, healthier and more sustainable direction. Real estate segments, from housing, commercial to industrial real estate, all showed signs of positive growth with many new projects being implemented.

Ms. Pham Thi Mien, Deputy Director of the Vietnam Real Estate Market Research and Evaluation Institute (VARs IRE) said that the residential real estate market has begun to show signs of "heating up".

Accordingly, the land auction story is "hotter" than ever with auctions held "overnight", recording hundreds, even thousands of people accepting to "eat and wait" to compete for a spot. The winning price is also a record high, equal to project land with well-invested infrastructure.

The heat of the market is also led by the apartment segment, with prices continuously setting new high levels, in both the primary and secondary markets. The high demand has caused thousands of apartment owners to regularly receive calls asking to sell their houses. Despite the high selling prices, newly launched apartment projects have recorded very good absorption rates.

Along with the apartment type, some newly launched low-rise projects of major investors also recorded a "record" number of bookings despite the increasing prices. Many apartments have good locations, not only high prices, but to buy them, customers/investors also have to accept paying the difference.

Land brokers "make waves"

In addition to the results from actual supply and demand, the market has also shown signs of “heating up”. This situation is reflected in land speculation, pushing up housing prices, and the emergence of non-transparent real estate transactions.

"Many small investors are entering the market for speculative purposes, causing real estate prices to rise unreasonably. Signs of "heating up" are also evident in the apartment segment with the increasingly high asking price of transferred apartments, due to the "assistance" of some speculative groups. These signs all stem from the lack of supply, although it has improved," said Ms. Mien.

Specifically, Ms. Mien said that in the third quarter of 2024, the residential real estate market continued to record a supply of 22,412 products offered on the market, with about 14,750 newly opened products, down 25% compared to the previous quarter, but up 60% compared to the same period in 2023. Despite the decrease in quantity according to statistics, the third quarter supply still showed "growth" when a number of new projects appeared, especially with the presence of large-scale projects that began to be deployed, making the market more "lively".

In the first 9 months of 2024, the market recorded 38,797 new products offered for sale. Supply still recorded strong differentiation. Accordingly, 70% of new supply came from the apartment segment. Of which, products with prices of over 50 million VND/m2 or more dominated. The market was almost completely devoid of affordable commercial apartments. In terms of region, the North led the new supply with 46%, followed by the Central region with 29% and the South with 25%.

VARS research data also shows that, although the supply is mainly in the high-end and luxury segments, the whole market recorded about 10,400 successful transactions in the third quarter, equivalent to an absorption rate of 51%. This reflects the market's interest in new real estate products, although most of the new supply is completed to high standards and investment costs, especially land-related costs, are increasing.

Transaction volume and absorption rate decreased by 25% and one percentage point respectively compared to the previous quarter but increased by 80% and 28 percentage points respectively compared to the same period in 2023. Of which, the volume of apartment transactions remained "overwhelming", accounting for 71% of total housing transactions in the third quarter, with new apartment projects recording an average absorption rate of 75%. Apartment projects in Hanoi even recorded an absorption rate of up to 90% shortly after opening for sale.

The trend of developing small apartments to reduce the overall value of the apartment, more suitable to the needs and financial capacity of singles and young families, is increasingly evident. This is also the type of property that records the best liquidity.

In the first 9 months of 2024, the market recorded 30,589 successful transactions, 2.5 times higher than the same period in 2023. Many new projects launched at the end of September, starting to receive bookings, also recorded a large amount of interest and "huge" deposits.

In terms of selling prices, housing prices continue to be "anchored" at a high level, in both the primary and secondary markets, especially in the apartment segment. The imbalance between supply and demand is becoming increasingly serious as supply, although improved, is still difficult to meet demand. In addition, most of the new supply continues to be completed at a high standard with investment costs, especially costs related to land, increasing.

Specifically, in the third quarter, the primary price level in Hanoi continued to increase and showed no signs of stopping, while supply has been gradually improving. New projects, from low-rise to high-rise products, mainly in the high-end and luxury segments, still received strong attention from the market. This has created a driving force leading to the secondary apartment price level remaining high, although liquidity has gradually stabilized after a period of "hot" growth.

In Da Nang, the primary price level of apartments also recorded a "record" increase, with more than 50% of new supply priced above VND80 million/m2. However, the market was still well absorbed thanks to investment demand from buyers outside the province, especially investors from Hanoi. In addition, the secondary price level also improved widely, with residential land prices in some areas increasing by 10-25% over the same period.

For Ho Chi Minh City, the primary price level remained stable at a high level due to the supply mainly coming from ongoing projects. Meanwhile, the primary price level in the provinces and cities surrounding Ho Chi Minh City increased slightly, ranging from 3-5%, with new supply having higher selling prices.

Research on apartment price index, reflecting the average selling price fluctuations of projects in the sample set of 150 projects selected and observed by VARS, also shows that, as of Q3/2024, the average selling price of the project cluster in Hanoi is close to 60 million VND/m2, an increase of 64.0% compared to Q2/2019. The average selling price of the project cluster in Ho Chi Minh City increased from 49.2 million VND/m2 to 64.2 million VND/m2, reflecting an increase of 30.6% compared to the base period. In Da Nang, the Da Nang market price index showed an increase of 46.2% in Q3, higher than the increase in Ho Chi Minh City.

"Demand for real estate, including housing and investment needs, continues to shift to suburban areas, provinces/cities surrounding the two special urban areas and the secondary market with many options at more reasonable prices. Apartments and houses under VND3 billion are being "hunted" strongly in Hanoi and Ho Chi Minh City," Ms. Mien emphasized.