Only 1 new commercial housing project licensed in southern Vietnam in Q2

Vietnam had 19 newly licensed commercial housing projects with about 10,230 units in the second quarter of 2024, including nine in the north, nine in the central region, and only one in the south, according to the Ministry of Construction.

The ministry’s Q2/2024 housing and real estate market report showed that the country had nine commercial housing projects completed in the quarter, providing the market with 5,005 units, equivalent to 90% of the figure in Q1 and up 28.57% from the same period last year. They included six projects in the north; one in the central region, and two in the south.

During the quarter, there were 50 projects eligible to sell houses, with 13,167 units, up 6.38% year-on-year. Of this, the northern region had 17 projects, the central region 20, and the southern region 13. In addition, 998 projects with about 437,153 units were under construction.

The construction ministry said that amid slow market recovery, many real estate businesses are planning to expand land funds to develop projects with legality, liquidity, land use fees among the top of their concerns.

Plunging commercial housing supply

The Vietnam Association of Realtors (VARS) reported that in Q2, the whole market had 27,335 products for sale, including 19,747 new products, three times higher than Q1. The rest were inventories of projects offered for sale in the previous phases.

In the first half of the year, there were 24,047 new products put for sale in the Vietnamese market.

In Q2, more than 50% of the housing supply was in the apartment segment, with more than 14,646 products for sale, and 60% was in the high-end and luxury segments (priced above VND50 million or $1,995 per square meter).

The proportions of luxury, high-end, mid-range and affordable apartment supplies were 6%, 27%, 14% and 7% respectively.

VARS said that in the last two quarters, apartments still accounted for the largest proportion. However, new projects for sale were mainly in the high-end and luxury segments.

Affordable apartment supply improved but not significantly, increasing only 1% per quarter. The real estate market in the north recorded the most positive signs, followed by the central region, while the southern region still faced many difficulties in supply.

Chairman of VARS Nguyen Van Dinh commented that since 2018, policies related to capital sources and regulators’ control measures have caused a serious decline in housing supply.

The demand for housing has continuously increased, putting pressure on supply and pushing real estate prices continuously up to new levels, especially in the apartment segment in Hanoi, he added.

From now until 2025, on average, Hanoi will lack about 50,000 apartments each year since the number of newly licensed commercial housing projects has continuously decreased and affordable apartments have completely disappeared.

Sharing the same view, Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association (HoREA), said that until the year-end, the real estate market will continue to experience an imbalance in housing supply and demand.

The shortage of housing supply will lead to higher housing prices, especially when there are a surplus of high-end housing and a lack of affordable commercial housing and social housing, he noted.

Notably, Ho Chi Minh City did not have any new commercial projects eligible to sell future-formed housing in the first two quarters of 2024. Most of the products opened for sale came from the next phases of existing projects. The imbalance in supply and demand and between segments has gradually become clear since 2019.

In the southern economic hub, the affordable housing segment (priced under VND25 million or $998 per sqm) has gradually disappeared.

In 2020, this segment accounted for only 1% of the total supply, but in the 2021-2023 period, it was no longer available in the city. In addition, in the near future, the HCMC market is forecast to suffer a shortage of housing supply priced under VND3 billion ($120,000) per unit.