3 factors driving residential real estate demand in the second half of 2021 and 2022

Three important factors are expected to boost residential real estate demand in the second half of 2021 and 2022, including: a large-scale recovery of the market, low interest rates on home loans, and low infrastructure. is promoted.

Favorable time for real estate is not far away

Recognizing the opportunities and potentials of the real estate market in the last months of 2021 and 2022, VNDirect Securities Joint Stock Company has made positive forecasts. Accordingly, the coming time is said to be a favorable time for the residential real estate segment.

Specifically, in the Hanoi market, the supply of new apartments in the second quarter of 2021 decreased by 36.7% over the same period, to 3,526 units due to the Covid-19 outbreak from May 2021; leading to a decrease in the number of apartments sold by 14.6% over the same period, to 3,921 units.

Meanwhile, the new supply of townhouses in Hanoi in the second quarter of 2021 increased by an impressive 597.2% year-on-year to 1,255 units, transaction volume increased by 460.8% over the same period to 858 units. Housing prices in Hanoi continued to increase in the second quarter of 2021, selling prices of primary apartments increased by 7.2% over the same period, to $1,472/m2, secondary townhouses increased by 13.7% over the same period. to 5,127 USD/m2.

In Ho Chi Minh City, the number of apartments sold strongly recovered in the second quarter of 2021, up 143.1% over the same period, reaching 4,700 units, thanks to the new supply increasing by 141.4% over the same period, reaching 3,968. apartment. The new supply of land-based housing continued to decrease by 85.3% over the same period, to only 97 units in the second quarter of 2021, which pulled the transaction volume down 91.4% over the same period, to 80 units.

In the second quarter of 2021, the average selling price of primary apartments increased by 16.5% over the same period to $2,260/m2, the price of secondary townhouses also increased sharply by 17.9% over the same period to $4,202/m2.

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Supply is recovering in Hanoi and HCMC

According to research team VNDirect, the real estate market may face temporary difficulties in the third quarter of 2021 due to the outbreak of the Covid-19 epidemic. However, VNDirect expects that the market will quickly return to strength as soon as the epidemic is under control.

"We observe that real estate supply is gradually recovering thanks to legal easing, while demand is also strongly driven by a broad-based market recovery, home loan interest rates remain low. and infrastructure is being accelerated development, so we think the real estate market will probably enter a favorable time from the fourth quarter of 2021", emphasized the report.

On that basis, VNDirect maintains a positive assessment of the residential real estate industry. However, at the same time, some downside risks have also been pointed out, such as the prolonged epidemic that limits sales and the price of construction materials continuing to rise. Shares of Vinhomes Joint Stock Company (VHM), Nam Long Investment Joint Stock Company (NLG) and Khang Dien Housing Business Investment JSC (KDH) are potential stocks selected by the research unit based on the prospect of signing for sale in the second half of the year. By the end of 2021 and 2022, be active and own a large land bank.

3 factors that officially drive the demand for residential real estate

Also in the report, the VNDirect research team has pointed out three factors that will drive residential real estate demand in the second half of 2021 and 2022, including: a large-scale recovery of the market, home loan interest rates continue to remain stable. maintained low and infrastructure enhanced.

Massive market recovery to boost real estate industry in the second half of 2021 and 2022

The speed at which vaccination is assessed is accelerating rapidly, helping to accelerate the reopening of the world economy in the second half of 2021.

As a large open economy, Vietnam has plenty of room to take advantage of opportunities when global purchasing power recovers. Vietnam's positive economic data for the first 6 months of 2021 is a clear indicator of a recovery in the next few years. VNDirect forecasts that the country's GDP will grow by 6.5-7.4% year-on-year in 2021-2022, respectively, thanks to the expansion of the manufacturing industry and the strong recovery of the service industry.

Home loan interest rates continue to remain low, helping to stimulate home buying demand

Besides, inflation risks are increasing along with macro growth momentum, but still under control. VNDirect believes that Vietnam's inflation can continue to be controlled in the second half of 2021 thanks to two main factors: the decrease in the food CPI in the context of falling pork prices and the application of measures to control inflation by the Government. effective development such as reducing electricity prices, limiting the export of raw materials. Therefore, the research team maintains the forecast that the average CPI in 2021 will increase by 2.9% over the same period.

Home loan interest rates continue to remain low, helping to stimulate home buying demand

According to the research team's statistics, home loan interest rates of domestic banks were relatively stable at 9.2-9.5% in the first half of 2021, still the lowest level in 10 years. "We expect the State Bank (SBV) to maintain an accommodative monetary policy in 2021 as inflation remains under control," the report stated.

Although it does not expect the SBV to cut further operating interest rates, VNDirect believes that the SBV will not raise interest rates in 2021 in order to continue supporting the economy by maintaining the loosening of monetary policy. Accordingly, mortgage interest rates are expected to remain low in 2021, thereby supporting real estate demand.

Accelerating infrastructure development will be the driving force behind the growth of the real estate market in the future

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Notable infrastructure projects for the period 2021 - 2026

The Government is taking more drastic actions to promote public investment in the second half of 2021, especially investment in infrastructure development to promote economic recovery. On July 9, the Ministry of Construction issued Directive 01/CT-BXD on speeding up the implementation and disbursement of the 2021 public investment capital plan. Accordingly, the disbursement of public investment capital was directed to complete 100% of the target in 2021.

The promotion of infrastructure development is considered to have a direct impact on the real estate market, which will become the main growth driver of real estate in the coming years. Some projects that have a positive impact on the real estate market that have been/expected to start construction in 2021 include: Long Thanh International Airport phase 1 (starting in early 2021); 6/11 North-South expressway component projects are under construction and the remaining 5 projects are expected to start construction in 2021.

There are also some notable projects expected to be completed in the second half of 2021 and 2022 such as the Nhon metro line - Hanoi station, Thu Thiem bridge 2 and metro line 1 (Ben Thanh - Suoi Tien).

In addition, another highlight mentioned in the report is that real estate developers are adapting to better solutions in sales.

Accordingly, in the context of a prolonged epidemic, investors are coming up with many new policies to support as well as increase the attractiveness and attract homebuyers, such as extending the payment period, some projects offer a support package that allows buyers to move in after paying 15 - 30% of the value such as New City Thu Thiem project, projects of VHM. Or as Masterise cooperated with Techcombank to launch a new housing solution "House Changer" to attract investors. This policy is expected to help attract investment and help homebuyers shorten the time to upgrade apartments.

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In addition, investors are also accelerating the transformation of their traditional sales activities to digital, in the context of the epidemic disrupting sales activities due to social distancing and travel restrictions. fly. For example, Vinhomes and Sunshine Group have launched their own mobile applications to browse homes and make reservations, allowing investors to tour homes online and chat live with realtors to support sales. .

According to VHM's statistics, as of July 2021, VHM's online sales activity recorded 8,607 successful bookings and 19,800 users. Moreover, the live-streaming event to launch the Metrolines complex (Vinhomes Smart City) of VHM in the second quarter of 2021 attracted more than 16,000 participants; The Vinhomes Sales app, which started piloting in May 2021, also recorded impressive numbers with 503 successful bookings, 46 agents and more than 6,000 registered users.

It can be seen that digital transformation is taking place strongly at VHM, along with a large number of products being sold by businesses, which will promote VHM's growth during the pandemic and contribute to VHM's sustainable development. Vinhomes also targets online sales to contribute 15% of its total sales in the coming years.

Recently, in the market report of the second quarter of 2021, the Ministry of Construction assessed that there was no new inventory of real estate in the second quarter from the primary market. The inventory of untransacted real estate is almost exclusively available to secondary investors and some types of real estate are being heavily impacted by the pandemic, such as tourism and resort real estate.

In order to promote the stable development of the real estate market, in the coming time, the Ministry of Construction said that it will continue to study and review amendments to the Law on Housing, Law on Real Estate Business, Decree 117/2015/ Decree-CP on construction, management and use of information systems on housing and real estate market; Research, submit for promulgation and well implement the National Housing Development Strategy to 2030 with a vision to 2040, stabilizing and balancing housing supply and demand, contributing to stabilizing the real estate market. .

According to Realtimes