Many signs show that the market has overcome the difficult period and recovered as home buyers have poured more money into the market. However, there are concerns that real estate prices will increase in many segments, especially commercial apartments.
In early 2023, 38 year old Ngoc Ly in Ho Chi Minh City’s Go Vap District sold her old house and planned to use nearly VND2 billion to buy an apartment. Nevertheless, at that time, home loan interest rates were too high, making her hesitate. When she saw home loan interest rates starting to cool down after the Lunar New Year, she contacted brokers to look for a 2-bedroom apartment in districts Phu Nhuan, Tan Binh, and Tan Phu.
She paid attention to apartments in good locations which can be rental so that she can still rent them out in the future if she doesn't live in them. However, after two months of working with many brokers and consulting many different commercial apartment projects, Ms. Ly still has not chosen to buy a house. The apartments she was offered months ago have now all been bought. Prices of some similar apartments even have slightly increased compared to before.
Ms. Ly said that she is currently taking heed of three banks with preferential interest rates in the range of 6 percent-6.5 percent a year because, with low interest rate, she feels brave to ask for a loan to buy a house on her own.
Real estate broker Le Thuy in Thu Duc City said that in the first quarter, she was successful in three transactions, mainly commercial apartments priced from VND2.5 billion to VND4 billion and buyers immediately moved into the new house right away. Data from the Nha Tot website has showed that the demand for apartments in Ho Chi Minh City in the first quarter of 2024 has increased three times and the number of ads for sale has also increased six times compared to the previous quarter.
According to the socio-economic report for the first quarter of 2024 of the Statistics Office of HCMC, the real estate business sector reached nearly VND61,000 billion, an increase of 15.7 percent. In the first quarter, the real estate business increased by 2.51 percent.
From the beginning of the year to the end of March, Ho Chi Minh City had 268 real estate businesses licensed to be established with registered capital reaching VND23,032 billion. The number of licensed enterprises decreased by 4.3 percent in number but increased by 255.8 percent in capital compared to the same period in 2023.
Regarding foreign direct investment licensing, the number of foreign investors contributing capital, buying shares, and repurchasing capital contributions in the real estate sector in the first quarter reached US$ 45.4 million.
According to data from the Ho Chi Minh City Department of Construction, for the whole year of 2023, the city has 19 commercial housing projects eligible for sale and lease-to-buy houses formed in the future with 17,753 condos on the market. Of these, 11,334 apartments belong to the high-end segment while 5,051 are in the mid-end segment but no projects in the affordable apartment segment.
Projects in the mid-end segment pricing from VND40 million-VND50 million per square meter are increasingly limited and currently very few projects still have products on the market, while some new projects do not yet qualify under the regulations but investors expect that they will be allowed to sell apartments.
According to the representative of the Department of Construction, many projects have been approved for investment policies and investment approval, but are still facing procedural bottlenecks such as financial obligations, land, and planning, and some projects even bumped into problems of legal procedures and land origin.
The scarcity of supply and rising housing prices make the dream of settling down for a group of middle-income people in large cities like Ho Chi Minh City hard to come true. An actual survey of housing prices in Ho Chi Minh City shows that the price of affordable apartments in District 12 like Zen Tower is also approximately VND 1.6 billion-VND1.7 billion for a 68 square meter apartment; Hiep Thanh apartment prices also range from VND1.6 billion for a 49 square meter apartment or 56 square meter apartment.
The Ho Chi Minh City Real Estate Association said that the supply of low-cost housing products does not meet the demand and because many project investors want to maximize profits, prices are pushed up, causing house prices to always tend to increase. In recent times, some real estate investors have even pushed their profit margin up to 30 percent to 40 percent.
Therefore, the government must simplify administrative procedures so that it is faster helping to reduce costs. At the same time, relevant agencies also need to soon remove legal bottlenecks for projects to increase supply to the real estate market, contributing to the reduction of house prices.
According to the Statistics Office of HCMC, the increase in real estate business revenue in the first quarter of 2024 shows that activities in real estate business are warming up due to the impact of policies to support and promote the real estate market. In addition, budget revenue from housing and land increased by 36.9 percent in the first quarter compared to the same period last year.
Leaders of the Statistics Office of HCMC said that the real estate market in the first quarter prospered when the Government and businesses implemented many related policies on legal issues and interest rates, contributing to increasing liquidity and project implementation progress.
According to Ho Chi Minh City's housing development plan for the period 2021-2025 and the project ‘Investment in building at least 1 million social housing apartments for low-income people and industrial park workers from 2021 to 2030’ by the Prime Minister, Ho Chi Minh City plans to develop about 26,200-35,000 social housing condos. Specifically, 37 projects will be included in the implementation plan.
However, up to now, only one project has been completed. Of the remaining 36 projects, six projects are under construction and 30 projects have completed legal procedures. With the legal situation and other related issues, from now to 2025, Ho Chi Minh City is expected to invest in construction, complete and put into use 13 projects providing 12,000 apartments for the property market.
