FORECAST OF 3 GROWTH SCENARIOS FOR THE YEAR-END HOUSING MARKET - OTIS LAWYERS

The forecast for Vietnam's residential real estate market in the last three months of 2024 suggests more positive developments, with a significant improvement in new supply compared to Q3/2024. However, the level of growth and absorption rate will depend on various factors, shaping an ideal, expected, or challenging scenario for the market...

According to data from the Economic-Financial-Real Estate Research Institute of Dat Xanh Services (Dat Xanh Services - FERI), Vietnam's residential real estate market in Q3/2024 witnessed a decline in supply, a slight increase in prices, and an improvement in the property absorption rate.

Specifically, in Q3/2024, only the Hanoi area and neighboring provinces saw a 13% quarter-on-quarter increase, while total new housing supply slightly declined in the Central region, Ho Chi Minh City, and nearby provinces, as well as the Western region. This was due to investors limiting releases during the "Ghost Month" (Month of the Hungry Ghosts) and adjustments to meet new regulatory requirements, impacting investors' release plans.

Despite this, the overall absorption rate of the primary market supply improved compared to the end of Q2/2024. For instance, Hanoi and neighboring provinces saw a 15-25% increase, while Ho Chi Minh City and its nearby provinces experienced a similar 15-25% growth. Additionally, primary sales prices continued to rise by 5-10% for apartments and began expanding to other types, though mainly concentrated in key markets in Hanoi, Da Nang, Ho Chi Minh City, and surrounding satellite towns. For secondary market prices, the situation of selling at a loss decreased, and a price gap of 10-20% began to appear for apartments.

Forecasting the residential real estate market in Vietnam for the last three months of 2024, the unit anticipates more positive changes, with new supply expected to improve significantly compared to Q3/2024. However, the extent of growth and absorption will still rely on multiple factors, leading to three different scenarios:

• Ideal Scenario: New supply increases sharply by 40%-50%, floating interest rates are at 8%-9%, sales prices rise by 10-15%, and the absorption rate reaches 40%-45%. This is the most optimistic scenario, expecting an early recovery of the market.
• Expected Scenario: New supply rises by 25%-35%, floating interest rates are at 9%-11%, sales prices grow by 5%-10%, and the absorption rate achieves 35%-40%. This is the most feasible scenario, reflecting positively improved market growth.
• Challenging Scenario: New supply increases by 10%-20%, floating interest rates rise to 10%-12%, sales prices grow by 3%-5%, and the absorption rate only reaches 20%-25%. This is the most cautious scenario, indicating a slow recovery phase for the market.

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