The Q3/2023 report published by Batdongsan.com.vn on October 4 shows that the real estate market has shown positive signs in terms of transaction demand and buyer psychology. (Source: Construction Newspaper)

3 important indicators that signal a reversal point

According to the Report, there are 3 basic indicators of the real estate market that are consistent with the previously predicted trend.

Firstly , regarding bank interest rates, if in the period 2008-2012, the market took 4 years to show signs of adjusting bank interest rates, in this period, from the first quarter of 2023, the State Bank has made 2 adjustments to reduce operating interest rates, followed by reductions in many types of interest rates.

Second, on credit growth. Looking back at the story of 2012, credit growth decreased from 20% to 7%, while inflation reached 8%. In 2013, credit growth increased to 12% and inflation was 6%. Right in the year of credit easing, the real estate market immediately showed signs of reversal. In the current market context, from the beginning of 2023, the State Bank has oriented credit growth for the whole year of 2023 at 14-15%, compared to 14% in 2022, this is a positive signal.

Third, about real estate policy. In 2008, real estate market liquidity plummeted, but it was not until 2013 that market support policies such as the 30,000 billion VND support package and the promulgation of the revised Land Law were introduced. In 2022, the market experienced a slowdown again as credit was tightened, interest rates increased, and liquidity decreased.

However, since the end of 2022, the Government has continuously implemented measures to remove difficulties for the real estate market such as the 120,000 billion VND support package, Decree 08 to help relieve the pressure of bond payments for businesses, Resolution 33 contributing to unclogging the real estate market, Decree 35 allowing the Provincial People's Committee to regulate areas that can be divided into plots for sale, etc.

Based on the analysis of the above indicators, the Report still maintains the opinion: "The real estate market is likely to recover around the second quarter to the fourth quarter of 2023".

Land segment: South increases sharply, North increases steadily

According to data from Batdongsan.com.vn , the land price index has maintained a stable increase from 2018 to present nationwide but tends to differentiate between specific regions and areas in 2023.

After a long period from the first quarter of 2018 to the third quarter of 2023, the selling price of land in the South increased by 71%, and in the North by 54%. Thus, over the past 5 years, the average price increase of land in the South was higher than that in the North.

However, considering 2023 alone, land prices in the two regions have shown different trends. The average selling price of land in the North has maintained an upward trend, increasing by 4.9% in the third quarter of 2023 compared to the fourth quarter of 2022. Meanwhile, the land price chart in the South has shown signs of decline, decreasing by 26.2% since the end of last year.

Typical provinces in the North witnessed stable growth in land prices over a long period, from the first quarter of 2018 to the third quarter of 2023, including Hai Phong (up 128%), Quang Ninh (up 44%), Hung Yen (up 36%), and Bac Ninh (up 20%).

In the South, Binh Duong has increased land prices by 147% compared to the beginning of 2018, being one of the provinces maintaining the best land price growth rate in the region. Land in other localities such as Long An, Ba Ria-Vung Tau, Dong Nai, although recently there has been a decline in selling prices, overall in the past 5 years, it has still achieved price increases of 89%, 64% and 60% respectively.

Low-rise real estate market is differentiated

Since the beginning of the year, the low-rise real estate market nationwide has been sluggish with a decline in transaction volume. According to the third quarter 2023 report of Batdongsan.com.vn , 57% of brokers participating in the survey said that transactions of low-rise real estate products decreased by more than 50%, 28% commented that transactions decreased by 10% - 50%.

Mr. Dinh Minh Tuan - Director of Batdongsan.com.vn in the Southern region, commented that price is the biggest barrier for buyers at the present time because low-rise real estate types have prices much higher than the average income of people and products with high value are difficult to borrow to buy.

The average selling price of townhouses in the third quarter of 2023 is VND 333 million/m2 in Hanoi, and VND 209 million/m2 in Ho Chi Minh City.

Mr. Dinh Minh Tuan said that each low-rise real estate segment has a different trend and recovery potential. Specifically, townhouses are still quiet because tourism and retail activities have not grown strongly due to the impact of the macro economy and the post-Covid-19 pandemic.

Data from Batdongsan.com.vn shows that the level of interest in townhouses in central urban areas has remained almost flat, while in coastal tourist provinces in the Central, Northern and Southern regions, it has decreased by 11%, 22% and 41% respectively compared to the first quarter of 2021.

Since the beginning of the year, the low-rise real estate market nationwide has fallen into a slump with a decline in transaction volume. (Source: Dan Viet)

Meanwhile, townhouses and villas in suburban urban areas are quite potential thanks to the future infrastructure network supporting the trend of expanding urban areas to the outskirts and neighboring areas. Many suburban urban areas have witnessed good price increases for villas and townhouses in recent years, such as Starlake Urban Area, Ciputra, Mailand Hanoi City, Vinhomes Riverside, ParkCity, Ecopark (Hanoi) with an increase of over 20%, 30% per year; or Swan Bay Urban Area, Eco Village Saigon River, Mizuki Park (Ho Chi Minh City) with price increases of over 20% per year, according to data from Batdongsan.com.vn .

For private houses, the level of interest and asking prices remain stable in Hanoi, as this type of property serves real housing needs, so demand is still maintained. In the third quarter of 2023, the asking prices of private houses in many districts such as Tay Ho, Hai Ba Trung, Dong Da, Hoang Mai, and Ha Dong still increased by 4% - 9% compared to the same period in 2022. The level of interest also increased slightly by 2% - 3% in some districts of Hanoi.

In Ho Chi Minh City, selling prices and interest in private homes are trending down, but the decrease is not more than 10% compared to the third quarter of 2022.

Apartment investment achieves average profit of about 12.5%/year

The report also shows that apartments are the type of real estate least affected by the negative impacts of the market in the past year because this type serves real housing needs. In the third quarter of 2023, the level of interest in apartments has shown signs of recovery, with demand for buying apartments increasing by 1% and rentals increasing by 6% compared to the previous quarter. Of which, apartments priced from 2 to 4 billion VND are the most searched.

In 2023, the selling price of apartments did not change much, only increasing slightly from 1% - 5% in Hanoi and almost unchanged in Ho Chi Minh City. However, in the long term from 2015 to present, the price increase index of apartments in Hanoi and Ho Chi Minh City has exceeded the growth rate of people's income. After 8 years, apartment prices in Ho Chi Minh City and Hanoi increased by 82% and 56% respectively, while the income of people in urban areas increased by only 39%.

Mr. Le Bao Long - Strategy Director of Batdongsan.com.vn commented: "Buying an apartment is becoming increasingly difficult for people when the rate of income growth cannot keep up with the rate of house price growth. In the future, primary apartment projects will also have high prices because investors have to optimize profits when costs are pushed up.

Regarding the psychology of real estate consumers, in the context of high housing prices, people are turning to renting or looking for ways to borrow money to buy a house. However, at present, many buyers have not yet taken out a loan to buy because they are still concerned about interest rates.

Because the price of apartments is constantly increasing and the demand for buying and renting this type of property is always high, the average profit rate when investing in apartments is up to 12.5%/year (combining the price increase and rental profit). This is a better and more stable profit rate than other types of investment such as stocks, gold, foreign currency, land, and savings.