In the third quarter of 2024, primary supply decreased by 13% quarter-on-quarter and 36% year-on-year to 4,871 units, due to reduced inventory and no new projects launched for sale, according to a report from Savills.
Class B accounts for the majority of supply with 60% market share, followed by Class C with 38% and Class A with 2%. The East (Thu Duc City) accounts for 58% of the market share, the West (District 6, Binh Tan) accounts for 20%.
New supply in the quarter reached 799 units from subsequent phases of 6 projects, down 30% QoQ.
Notably, 5 projects reopened for sale with 545 apartments, after legal issues were resolved.
Low supply also affects liquidity. According to Savills, the number of transactions in the quarter decreased by 16% quarter-on-quarter and 4% year-on-year to 1,915 units. This is something that investors are quite worried about because it will make it difficult for investors to improve their cash flow.
According to Mr. Vo Hong Thang - Investment Director of DKRA Group, currently, a large number of home buyers are still cautious, observing market developments, waiting to see how the new laws will be implemented after they come into effect, then making transactions to ensure more benefits. This is the main reason why the apartment absorption rate has decreased sharply in the past 2 months.
In addition, the market during this time has almost no new projects for sale, mainly from existing projects or the next phase, the product basket is not diverse, many investors have not really promoted promotion and sales activities. Moreover, the current selling price is not for the majority of customers when anchored at a high level.
All of that directly puts pressure on real estate businesses as inventories and debt continue to increase sharply.
In the first 6 months of 2024, the total debt of real estate investors listed on the stock market increased by 19% compared to the same period in 2023. The debt figure is forecast to continue to increase in the context that many businesses are advocating increasing borrowing to develop new projects. In return, the bright spot is that debt repayment capacity will recover slightly in the first 6 months of 2024 thanks to improved operating cash flow and cash resources.
Experts from Vietnam Investment Credit Rating Joint Stock Company (VIS Rating) also provided a remarkable figure, which is that more than 2/3 of listed investors have cash flow to repay debt from weak to extremely weak levels. Specifically, operating cash flow is less than 5% of total debt, especially investors affected by project legal issues. The heavy dependence on short-term loans causes significant refinancing risks.
Dr. Su Ngoc Khuong - real estate research expert - also assessed that the real estate market is in a context of limited supply, high prices, low liquidity, and products that do not meet the needs of the majority. There are only a few months left until the end of 2024, so new policies cannot be like a "magic wand" to help the real estate market bustle immediately, but will improve gradually.
"From now until the end of the year, market liquidity may improve but it does not represent the majority, because with the limited income and spending ability of the majority of people today, it is difficult to consume high-priced real estate products currently on the market," Dr. Khuong stated his opinion.
