Housing market to have brighter prospect this year: experts

January 30, 2021 - 08:41

The Việt Nam Real Estate Brokerage Association forecasts the housing real estate market in 2021 to have more optimistic developments due to the effective prevention of the COVID-19 pandemic and domestic economic recovery momentum.

A view of HCM CIty. In HCM City, about 20 projects will be launched in the first six months of 2021 with about 30,000 products in all segments. — Photo .cbrevietnam.com

HÀ NỘI — The Việt Nam Real Estate Brokerage Association forecasts the housing real estate market in 2021 to have more optimistic developments due to the effective prevention of the COVID-19 pandemic and domestic economic recovery momentum.

Projects that have problems relating to laws will continue to solve the issues. Therefore, the country's apartment supply will increase sharply compared to 2020, according to the association.

In the first and second quarters of 2021, tens of thousands of products in all segments are expected to be offered in Hà Nội and HCM City, the two largest real estate markets. Of which, the north and west of Hà Nội will account for the largest proportion.

In HCM City, about 20 projects will be launched in the first six months of 2021 with about 30,000 products in all segments. 

In terms of demand, according to the association, the domestic economy will keep pace and achieve better growth, so the demand for investment and buying houses will increase again.

The apartment segment is expected to account for a large proportion in Hà Nội and HCM City housing markets. The mid-end apartment with two bedrooms continues to be traded the most. In 2021, from 90,000 to 100,000 two-bedroom apartments are expected to be traded in these two major markets.

Meanwhile, about 25,000 apartments from 25 project launches and two next phases of existing projects will enter the Hà Nội market in 2021 according to the Savills Việt Nam’s report on the Hà Nội property market for the fourth quarter of 2020 that was released last week.

Grade B with 78 per cent will continue to lead. Leading suppliers will be Từ Liêm District with 57 per cent of supply, Hoàng Mai and Gia Lâm districts with 12 per cent each.

Real estate investment activities have new brand names entering and other expanding portfolios in Việt Nam. Protech investment and growth is being driven by momentum in the real estate market, it said.

“2020 ends with activity increasing as confidence returns. The pandemic slowed international visitors. However, local demand remains steady, particularly for affordable units. Developers have started focusing on suburban areas and surrounding provinces,” said Đỗ Thu Hằng, Savills Director of Research & Advisory.

Pent-up demand has supported performance. Total sales of nearly 6,700 units were up 27 per cent quarter on quarter with average absorption of 25 per cent, up 5 percentage points quarter on quarter. Performance improved in Grades B and C.

Annual performance affected by the pandemic saw sales decreasing 43 per cent year on year to their lowest in five years. Grade B with 64 per cent of sales remained the lead performer.

Hằng also said the pandemic will carry on affecting both real estate performance and associated businesses in the first half of 2021.

“In addition to COVID-19 effects, a lot of real estate businesses have been affected by slower project licensing and approval processes. There has also been increased competition from large supply and project implementation. Also, buyers are becoming more demanding in design, handover condition and extent of project utilities,” she said.

“Investing in real estate is always something that businesses can do in more quiet times to set up for the future. In the mid-term, they can maintain land fund development, project funding, project implementation and sales with the anticipation of improved growth over the long term."

"In addition, further definition of potential customer groups to establish better segment targeting from which they can then develop further value. As an example: investing in urban housing real estate in provinces with good legal frameworks to deliver product lines oriented to local customers.”

According to CBRE Vietnam, buying and leasing activities in the residential market are expected to restart with uneven recovery in 2021.

Phạm Ngọc Thiên Thanh, Associate Director, Research and Consulting Department, told Việt Nam News that: “Rents of condos, albeit not fully recovered, have increased by 10-20 per cent compared to the last outbreak. Most notably, primary selling prices at HCM City and Hà Nội market increased by 10 per cent year-on-year and 3 per cent year-on-year, respectively while new supply has expanded into satellite provinces.”

COVID-19 has negatively impacted all buying and leasing activities on the residential market in 2020, not only for Vietnamese but also for foreign investors, Thanh said.

The leasing market also encountered difficulties while average rents dropped by 30-50 per cent at the first outbreak of the pandemic to attract more local home renters besides the foreign renters. Restrictions on travel also affected transactions by foreigners, although they can authorise local agencies for such transactions, she said.

Meanwhile, Matthew Powell, Director of Savills Hanoi, said as overall market prices continue to increase and affordable apartments represent a development opportunity.

“Despite increasing prices, new investment areas are becoming made available by new infrastructure factors, and in large-scale development areas such as Long Biên and Gia Lâm districts. Location predominantly determines land and dwelling prices. Government policies can play a more active role by making adjustments to allow the affordable housing market to operate more smoothly,” said Powell.

“Major developers are bringing more focus to affordable housing, providing good quality at good prices in the right locations.”

“Confidence remains for recovery in 2021. All real estate segment recovery is driven by macroeconomics and demographic demand. Supply levels are expected to improve in March or April 2021 with higher quality property development becoming more active in Hà Nội and HCM City.”

“Growth opportunities in the affordable housing segment are closely correlated with commercial activities and transport infrastructure, especially with Hà Nội and HCM City facing increasing traffic problems and the emergence of new metro lines,” he said.

The association also said the domestic market still has great demand in social housing products, especially for workers in industrial zones.

This year, apartment prices in Hà Nội can remain at the same level or increase slightly compared to 2020, while there is an increasing price trend in HCM City in the first six months of 2021, mainly in Thủ Đức City.

Landed property prices in quality urban areas of Hà Nội and HCM City will also continue to increase in 2021 by 5-10 per cent compared to 2020.

Real estate prices in other provinces and cities are predicted to increase by 5-7 per cent compared to 2020 and even by 10 per cent in localities such as Đồng Nai, Bình Dương and Phú Quốc City. VNS