Expectations for recovery of apartment market

Besides the profitability, the legality of this segment is of particular interest and this is also one of the top concerns of buyers.

Apartment is "sought after"

While many segments are struggling for liquidity, apartments are a bright spot pulling the real estate market up.

Batdongsan.com.vn continues to record positive developments in the apartment market, accordingly, the level of interest in apartments increased by 1% in the third quarter of 2023, although types such as private houses, townhouses, villas, land, project land, and villas all decreased from 4 - 11%.

Many developers have adopted sales policies, including support for interest and principal payments in the early stages, extended payment schedules, and rental commitment programs.

Although apartment prices have not increased significantly during the past quarter, the price level has remained at a very high level since last year. Apartment prices will continue to increase and rental yields will remain stable.

According to Batdongsan.com.vn, this year, apartment prices have only increased slightly by 1-5% in Hanoi and have remained almost the same in Ho Chi Minh City. However, in the period from 2015 to now, the apartment price increase index in Ho Chi Minh City and Hanoi has exceeded the growth rate of people's income, increasing by 82% and 56% respectively, while the income of people in urban areas has only increased by 39%.

Ms. Nguyen Minh Phuong in Binh Tho Ward, Thu Duc City, Ho Chi Minh City shared: “I have been married for nearly 10 years and have two young children, so I really need an apartment to settle down. An apartment is always an urgent choice to solve the housing needs of the whole family, but currently the minimum price is more than 2 billion VND, so I am still balancing my income, savings and loans to be able to pay off the debt and have money for living expenses.”

For many families who already have a house and some savings, in the context of limited liquidity of land or townhouses, apartments are still a safe investment channel, creating a passive income from renting out houses. According to many experts, this good profit level creates more stability than other types of investment such as stocks, gold, foreign currency, land, and savings.

Synthesizing, analyzing, and comparing from 2015 to present, Batdongsan.com.vn's report shows that due to the constant increase in apartment prices and the high demand for buying and renting this type of property, the average profit rate when investing in apartments is up to 12.5%/year (combining price increase and rental profit).

Vice President of the Vietnam Real Estate Association and President of the Vietnam Real Estate Brokerage Association Nguyen Van Dinh said that the current apartment prices are still high, the rate of decrease is weak. The demand for apartments is very high but the supply is scarce. Typically, in the past few years in Hanoi, no new apartment projects have been approved. In essence, when there are many interested people, but not many products, it leads to scarcity. From there, the price of apartments in Hanoi or other provinces and cities in general does not decrease.

Expected to lead the recovery trend soon

Dinh Minh Tuan, Director of Batdongsan.com.vn in the South, believes that the apartment market is likely to recover the earliest compared to other types, expected to fall in the first quarter of 2024 and will reverse in the second quarter of 2024 at the latest. In general, this is the type of market that is expected to lead the recovery trend of real estate.

Dat Xanh Services Economic - Financial - Real Estate Research Institute (DXS - PERI) also conducted a survey on the real estate segment that received a lot of attention from customers in the second half of 2023. The survey results showed that the apartment segment received the overwhelming choice of 73%; 15% chose low-rise houses, 10% of land; resort real estate accounted for only 2% of customers' choices.

Regarding the price range of apartments that customers are interested in, 82% choose apartments priced under 2.5 billion VND, 13% choose apartments from 2.5 - 3.5 billion VND, only 5% choose the price range above 3.5 billion VND. This shows that customers' choices are shifting strongly towards the price range of real estate products that meet real housing needs at affordable prices.

Le Bao Long, Strategic Director of Property Guru Vietnam, commented: In addition to the story of price, including selling price, rental price and profitability, the legality of apartments is of particular interest to real estate seekers. Legality is one of the top concerns of buyers and is gradually being resolved.

Currently, 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.

According to Batdongsan.com.vn about the psychology of real estate consumers, in the context of high housing prices, people are turning to renting or looking for ways to buy houses. However, at present, many buyers have not yet taken out loans because they are still concerned about interest rates.

According to experts, in recent times, the Government has issued a number of documents to resolve difficulties and problems in the market. Thereby, creating a foundation for investors to approve new projects and introduce new product lines to the market. Once there is clarity in regulations, the market will move towards sustainable development.

In addition, to promote housing supply, the Ministry of Construction will continue to review and resolve real estate projects facing difficulties, while shortening the time and simplifying procedures in establishing, appraising, and approving new projects...