Apartment supplies in Ho Chi Minh City and surrounding areas in 2023 were at their lowest level in the past five years, reported realty services firm DKRA.
In the primary market, only 126 apartment projects, including 10 new ones, were offered for sale with about 22,071 units, down 32% compared to 2022, DKRA said in its report on the 2023 real estate market in HCMC and its vicinity.
New supply mainly arrived in the Eastern area of Ho Chi Minh City (64%), Binh Duong province (31%), and Dong Nai, Long An and Ba Ria - Vung Tau (the rest). Notably, no new projects were put on sale in Tay Ninh province.
Transactions were also lower than the 2020-2022 period, reaching 9,664 units, equal to 44% of the supply in the primary market and down 56% year-on-year.
Mid-end projects with prices ranging from VND40-55 million ($1,640-2,255) per square meter, full legal status, rapid construction progress, and good connectivity saw good sales. Notably, demand recorded a slight increase in the second half of 2023 but the absorption rate was at the lowest level compared to the average of the 2020-2022 period, reaching only about 68-87%.
The respective highest and lowest selling prices were VND425 million ($17,428) and VND30 million ($1,230) per square meter in HCMC; VND59 million ($2,420) and VND27 million ($1,107) in Binh Duong; VND51 million ($2,090) and VND35 million ($1,435) in Ba Ria - Vung Tau; VND35 million and VND31 million in Dong Nai; and VND24 million ($986) and VND21 million in Long An.
DKRA said the 2023 selling price level in the primary market did not see many changes compared to the start of the year as investors applied policies such as discounts for quick payment, and principal and interest grace periods for borrowers to stimulate demand. Meanwhile, liquidity in the secondary market remained low, with prices decreasing about 3-8% from the end of 2022.
Vo Hong Thang, R&D director at DKRA, said the real estate market has been struggling for three years, with shrinking supply and demand. Many opinions said that the property market is likely to continue gloomy in 2024.
However, this expert held that the end of 2024 could be the beginning of the next growth cycle of the market. The residential housing segment is expected to lead the market's recovery, especially projects in big city centers and surrounding areas with well-connected transport systems.
“This year, the supply of new apartments will increase compared to 2023, at about 12,000-15,000 units, including 8,000-10,000 in HCMC, 4,000-6,000 in Binh Duong, and 300-500 each in Dong Nai and Ba Ria-Vung Tau. Other provinces and cities will continue to face new supply scarcity,” he forecast.
Market supply and demand are expected to improve from the third quarter when policies are sufficiently "absorbed," helping to remove legal obstacles, as well as when economic recovery prospects become clearer. The high-end apartment segment is projected to maintain its dominant position in HCMC, while mid-end and affordable apartments will account for a large proportion in Binh Duong and neighboring provinces.