Affordable housing will lead the Vietnamese real estate market recovery this year as even in the most difficult times, this segment still draws great attention from customers, said experts.
Data from the Vietnam Association of Realtors (VARS) shows that the proportion of affordable apartments (under VND25 million or $1,023 per square meter) in the total housing supply has continuously decreased, from 30% in 2019 to 7% in 2022 and 6% in 2023.
In the 2019-2022 period, the proportion of mid-end apartments (VND25-50 million or $1,023-2,034 per sqm) also fell to 54%, 46%, 34%, 27% respectively, with the supply mainly coming from high-end products priced at VND40-50 million ($1,626-2,034) per sqm.
Meanwhile, real needs have always led the housing demand structure, accounting for up to 80%, while 15% is for long-term investment and 5% for speculation. But only 25% of people with real housing demand have the financial ability to buy a home.
In that context, VARS assessed that, along with social housing, affordable housing will be the main and strong development trend in the real estate market in the coming period as it meets the actual needs and capabilities of the majority of people.
According to VARS, rapid economic growth and urbanization have increased demand for housing while supply has continuously declined and has not yet shown signs of expanding since 2018, resulting in an increasingly big gap between supply and demand.
"The supply structure is increasingly leaning towards high-end and high-value products, serving investment and speculation purposes. This prolonged supply-demand mismatch has caused housing prices to continuously increase to levels far beyond the payment ability of the majority of buyers, especially young people," VARS said.
VARS chairman Nguyen Van Dinh held that developing affordable housing will open up opportunities to fill the gap between supply and demand, meeting the housing needs of the majority of people with average and near-average incomes, thus pulling down prices across the entire market.
Anticipating market recovery
Even in the general gloomy context of the real estate market in 2023, the affordable housing segment still received special attention from customers with stable transaction levels. Meanwhile, the high-end and luxury segments almost "stood still" in the past year.
Kim Lien, sales director of Dat Xanh Services, said that in terms of demand, last year, about 67% of customers were interested in apartments priced under VND2.5 billion ($101,730), 21% had demand for apartments worth VND2.5-3.5 billion ($101,730-142,420), and less than 3% for those worth over VND5 billion ($203,460).
"The actual demand for the high-end real estate segment this year is quite low. People will prefer low-cost houses and affordable apartments, but there aren't enough of these products," she said.
One of the factors that make customers hesitant to buy real estate is they do not have enough money and are not confident enough about their current incomes, Lien noted.
"Many customers said that they cannot find products that are suitable for their finances and are not confident enough to borrow a large amount of money to buy real estate even though lending interest rates have decreased. Buyers want to purchase houses at affordable prices while the market mainly offers those in the high-end segment," she said.
Meanwhile, Thanh Thao, sales director at Phu Dong Group, held that in 2022-2023, the real estate market suffered general difficulties. However, the segment from VND2-3 billion ($81,320-122,000) still recorded the interest of customers and there was a certain amount of purchases and transfers, creating liquidity for businesses.
According to Thao, affordable housing projects will "heat up" the real estate market in 2024. Around the end of 2023 and early this year, many new affordable projects were launched. Most recently, Phu Dong Group introduced the Phu Dong SkyOne project in Di An town, the southern province of Binh Duong.
Phu Dong SkyOne is an apartment project serving real housing needs, she said, adding it will be built on an area of 5,615 sqm with investment capital of VND1.1 trillion ($44,724), including two 30-storey apartment blocks, each with one basement. Once completed, it will supply 780 apartments with areas ranging from 42-75 sqm.
This project is expected to be launched in March 2024 with an expected selling price of VND1.4-2.2 billion ($56,900-89,400) per apartment, of which 75% are priced from VND1.4-1.8 billion, meeting the needs of the majority of young families. The apartments are expected to be handed over in December 2025.
Also in this segment, Nam Long Group will launch Ehome Southgate in Ben Luc district, the Mekong Delta province of Long An, with prices starting from only VND1.1 billion ($44,730) per unit.
In Ho Chi Minh City, this developer’s affordable apartment projects include Akari City in Binh Tan district with prices starting from only VND43 million ($1,750) per sqm; and Mizuki Park in Binh Chanh district from VND46 million ($1,870) per sqm. In the 2024-2025 period, Nam Long also plans to provide the market with more than 3,000 low-cost and affordable housing products.
In addition, many other affordable projects such as MT Eastmark City of Dien Phuc Thanh and 9X An Suong of Hung Thinh Land will also be implemented in 2024.
To catch the market recovery, many experts believe that businesses need to reduce profit margins and adjust selling prices to draw cash flow. In addition, they must also have strategies to bring affordable housing products to customers.