Hanoi and Ho Chi Minh City both have a shortage of mid-range apartment supply.

According to a recent report by the Vietnam Association of Realtors (VARS), the total housing supply in 2023 will reach about 55,329 products, an increase of about 14% compared to the total number of products offered for sale in 2022 but still only 32% compared to 2018.

It is worth noting that the proportion of sources is also gradually unbalanced when affordable housing products are in shortage. When calculated on the total supply, the affordable segment has decreased significantly from 30% in 2019 to 6% in 2023.

The market supply recorded the highest level in the mid-range apartment segment accounting for 40%, followed by low-rise products, land plots (24%) and luxury apartments (22%), super luxury and affordable apartments accounted for an equivalent proportion of 5%. Of which, affordable apartments priced under 25 million VND/m2 are only available in the provincial market or social housing projects.

It is worth mentioning that mid-range apartments with prices of 40-50 million VND/m2 have also begun to be scarce in supply in Hanoi and Ho Chi Minh City. Specifically, in the primary market, the average apartment price in Hanoi is 51.7 million VND/m2 and in Ho Chi Minh City is 71 million VND/m2. New supply is only recorded in neighboring provinces with a "drop by drop" amount of products.

Hanoi and Ho Chi Minh City are both short of housing resources in the central region. — Housing supply and transactions in the period 2022-2023

The price level of apartments in the primary market is difficult to decrease due to input costs (housing index and construction material prices increase by about 6% each year), inflation, and increasing interest rates. While the number of newly approved commercial housing projects is increasingly scarce, land funds in central areas are also not much left.

Although the selling price has not decreased, home buyers still benefit from preferential policies that have never been seen before in the race of policies of investors. Buyers can pay in installments, enjoy preferential interest rates, and principal grace period with a period 2-3 times longer than previous years.

This report also shows that supply is unlikely to increase in the short term because the number of newly licensed commercial housing projects is very small and tends to decrease, especially in the affordable and mid-range segments. The reason is that legal bottlenecks make state management agencies more cautious in approving projects. Legal problems make it difficult for businesses to find outlets, and they do not have the resources to pay off debts and develop new projects.

Hanoi and Ho Chi Minh City are both short of housing resources in the central area, picture 2 — Mid-range apartments are also in short supply in big cities.

In the secondary market, investors have begun to take advantage of preferential interest rates to hunt for potential products. Secondary transactions are becoming more and more active, especially in the apartment and land segments. The market has begun to record some areas creating local fever with some areas being pushed up in price many times in 1 month.

Forecasting the real estate market in 2024, VARS believes that about 20 mechanisms and policies to support the real estate market that have been issued in 2023 will have a positive impact on the real estate market. In addition, the general planning of many provinces that has been approved will help to open some legal bottlenecks, creating conditions for projects that are stuck in related legal issues to have the opportunity to be approved.

In addition, the implementation of public investment projects, especially transport infrastructure in some localities and regions, will lead to the development of the real estate market. Meanwhile, the urbanization rate is increasing. Therefore, VARS believes that the frequency of launching new supplies in 2024 will be more regular and dense.

In particular, Binh Duong will become a bright spot in the Southern region with about 10,000 new products, launching for the first time on the market. Ho Chi Minh City will have about 5,000 new products, not including inventory products. If legal procedures are completed on schedule, the project is not suspended due to financial difficulties of the investor, it is expected that the Hanoi market will receive about 15,000 apartments and low-rise products.

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