Binh Duong leads southern localities in affordable apartment supply

Affordable apartment supply increased significantly in the southern region in the second quarter of this year, mainly in Thuan An, Di An and Thu Dau Mot towns of Binh Duong province, dubbed the industrial "capital" of the country.

Property consultancy firm DKRA Vietnam said in a report that in Q2, the southern region real estate market saw 15 projects open for sale with 1,826 units, of which the affordable segment accounted for 39%. In total, 1,179 apartments or 65% of this new supply were sold.

The report showed that the new supply in HCMC and neighboring provinces in April-June rose 33% compared to the previous quarter but decreased 87% over the same period last year. Of which, HCMC and its neighbor Binh Duong made up nearly 90%.

In HCMC, the luxury apartment segment continued to lead the way, accounting for 91% of the new supply in the quarter, with most projects located in Thu Duc city.

The overall demand of the market increased from the first quarter but remained at a low level compared to the same period last year, with new supply absorption equivalent to only 10% of the Q2/2022 figure.

Prices in the primary market remained stable, but those in the secondary market fell 3-7% from the previous quarter. However, liquidity was still low.

In HCMC, the highest selling price of new projects was nearly VND95 million ($4,020) per square meter, while the lowest was VND43.5 million ($1,840).

Meanwhile, the respective prices were VND49 million and VND31.7 million in Binh Duong; VND34.9 million and VND31.1 million in Dong Nai; and VND24.6 million and VND22.8 million in Long An.

According to Vo Hong Thang, director of consultancy services and project development at DKRA Vietnam, state management agencies are speeding up the removal of legal barriers to unleash the property market. However, since the end of April, supply and consumption have decreased sharply to only 5-10% of the same period last year. At the same time, investor sentiment and confidence in the market is currently at a very low level due to less positive information.

"We are lacking documents, circulars and decrees detailing coordination among agencies to remove legal barriers," Thang said, adding that it takes time for measures to be taken synchronously and have an impact on the market.

He also held that lending interest rates remain high, at 10-14% per year. Therefore, in order to create momentum for the market to recover, interest rates must be lowered.

"The recent moves taken by authorities are yet to show clear impacts, but these are all solid foundations for a sustainable recovery of the market at the end of 2023 or the first half of 2024 at the latest," Thang said.

DKRA forecast that the new supply may increase in the coming time, with 1,200-1,500 units in HCMC, 500-800 units in Binh Duong, 150 units in Dong Nai, and 250 units in Ba Ria-Vung Tau expected to go on sale in the third quarter.

Luxury apartments will continue to dominate the market in Ho Chi Minh City while the mid-priced and affordable apartment segments will lead new supplies in its neighboring provinces, it said.

Selling prices in the primary market are predicted remain stable, with continued pressure from input costs, prolonged legal procedures and loan interest. Prices and liquidity in the secondary market may improve compared to the second quarter, focusing on the affordable housing segment with full legal status, priced at less than VND40 million ($1,690) per square meter.