Accept price reduction to suit demand

In 2023, the entire real estate market witnessed a gray picture when all segments were gloomy, market liquidity only rarely appeared in some segments, which made many investors worried.

A series of difficulties have caused developers and investors to fall into a "difficult" situation of bearing losses. Meanwhile, experts say the most difficult thing in the market is the supply, when it is not guaranteed legal issues. The supply is not suitable for the needs of current investors, especially the need for inappropriate payment capacity.

Mr. Ngo Quang Phuc - General Director of Phu Dong Group commented: "The current real estate supply is scarce, if there are products on the market, they are at very high prices, which makes the gap between supply and demand increasingly obvious. Meanwhile, the current demand and payment capacity of investors are not suitable."

“For example, a person living in an apartment wants to move down to a townhouse, but the townhouse must be within their budget. If an apartment sells for 3 billion, they are willing to buy a house for 5 billion, but it is not easy to find a residential area with that price. If they want to buy, they must pay 7-10-15 billion to make a profit,” Mr. Phuc shared.

According to Mr. Phuc, in addition to legal difficulties, the most difficult problem is that the product is not suitable for people's payment ability. This does not solve the liquidity problem. And if the product is suitable for the wallet, the legal aspect is not necessarily correct.

“To solve this market smoothly, we must solve the legal aspect of the project, complete it, and launch products that are suitable for people’s budgets. The market will automatically adjust and enter a process of operation, because everyone has demand. When there is a good liquidity market, banks will lend because investors have sold their products, and banks have the ability to collect debts,” said the General Director of Phu Dong Group.

According to Mr. Phuc, currently liquidity is only focused on a few investors in Ho Chi Minh City such as Nam Long, Khang Dien, or Binh Duong such as Phu Dong, Bcons, Le Phong... these are the units that are assessed to sell products and gain market share.

“The investor is still selling products, although not much, it is still a bright spot in the market. The first thing that this business must have is the capacity to implement the project, which is the investor's internal economy. Legally complete and importantly, the product is affordable, the investors meet the conditions. The investors build quickly, build ahead of schedule to hand over to customers, this can be considered a prestigious job and strong potential of the investors. Because without the economy, they cannot implement the project in this difficult period,” Mr. Phuc shared.

“In my opinion, the supply is now very scarce, in the area the real housing demand of the people is increasing. However, the nature of the market and the industries surrounding real estate are also developing, the costs of labor, construction, materials and input costs are not decreasing. This forces the real estate selling price to increase so that businesses can make a profit. In order for supply and demand to meet, investors must have a complete legal roadmap as soon as possible, accept low profits to sell products that suit the needs of buyers, then only then will liquidity and cash flow be created,” said Mr. Ngo Quang Phuc.

2024 market “bright color”

Experts assess that although the difficulties of the real estate market are showing through each stage, in 2024 the real estate market will have much brighter colors.

The important thing to help the market develop together, according to experts, is to change the psychology of buying real estate. Because if buyers keep waiting for real estate prices to decrease, they will not make the market liquid.

Talking to Nguoi Dua Tin , Mr. Le Van Hung, Director of Nam Phat Real Estate Construction Joint Stock Company, commented: “Current supply exists, if demand does not buy, it will be “stuck”. The condition now is that real estate prices must be priced at an attractive enough threshold instead of saving money, buying gold, then people use that money to buy houses. Therefore, the supply must offer suitable products, the price must be reasonable, to increase the attractiveness for buyers. Buyers will see that there is no better opportunity, from there demand will arise.

Nowadays, many people intend to buy a house. Besides, bank interest rates are low, people tend to withdraw money to buy houses to rent out... when inflation occurs, they convert money into goods.

“But now, you can’t buy as much as you have money. Nowadays, buying real estate is very strict. People will choose very carefully, even if they can buy at a low price. Suppliers must be forced to reduce prices accordingly, and demand must be stimulated,” said Mr. Le Van Hung.

At the Vietnam Real Estate Conference - VRES 2023 recently held in Ho Chi Minh City, experts predicted that the real estate market sentiment index in the first half of 2024 will increase by 3 points compared to the second half of 2023.

Accordingly, the market sentiment index in early 2024 increased due to the level of satisfaction with the market, the belief that real estate prices will increase well in the future, the ability to buy a house, the assessment of the market situation, policies and interest rates all increased.

Expert Dinh Minh Tuan, Director of Batdongsan.com.vn in the Southern region, believes that the more positive psychology of real estate buyers and sellers will be an opportunity for the 2024 market to develop and overcome the remaining difficulties in 2023.

Ms. Pham Thi Nguyen Thanh, General Director of Dat Xanh Services, believes that 2024 will be a buyer's market.

Overall demand in 2024 remains weak, but will improve slightly compared to 2023, with purchasing power mainly concentrated in the Hanoi and Ho Chi Minh City markets. The affordable housing segment continues to lead the market. The rental housing market is growing well, with rental prices forecast to increase. In particular, primary selling prices are forecast to remain stable, with a slight increase of about 3% - 5%. Secondary selling prices are no longer in a deep decline, with sales at a loss mainly due to customers needing to sell to pay off bank loans urgently.

"Market confidence is very important now, and in 2023 it has improved and is starting to show clear signs of improvement. This key point is also expected to help market absorption increase slightly to 30%-35% in 2024," Ms. Thanh shared.

Giving advice to investors in 2024, Ms. Thanh said that for customers buying real estate, they need to regularly monitor market information to grasp trends, anticipate opportunities to buy real estate at the best price; Prepare financial resources carefully, limit borrowing to buy at high rates; Limit speculation following trends, crowd psychology, especially types of real estate with low liquidity; Choose good products from reputable and capable Investors, Developers, Sales Units; Take advantage of Sales Policies and Programs that have many incentives and support for customers.

“The market may have passed the most difficult period, but the prospect of an early recovery is still a question mark. This is the time when both businesses and customers need to maintain a cautious mindset, not be too extreme in the face of negative information and not be too optimistic in the face of “fake” positive signals. The real estate law in the coming time will help make the market transparent, supply meets demand, creating real real estate value, helping the whole market to appear “bright colors”, Ms. Pham Thi Nguyen Thanh - General Director of Dat Xanh Services shared.