HCMC's new, ready-built housing supply is likely to keep shrinking in 2023F given the city's limit    ed land bank and slow regulatory approval. 

Mr. Chu Duc Toan, senior analyst at VNDirect, said the take-up rate would keep falling to the 80% level (-c. 10% pts yoy) due to homebuyer sentiment remaining sluggish in 2023F. "We forecast condo primary prices to decrease by 5-10% yoy across the board. We believe developers should continue to offer some promotion discounts on the primary price to stimulate demand amid rising mortgage rates and limit  ed credit room," said Mr. Chu Duc Toan.

HCMC's new, ready-built housing supply is likely to keep shrinking in 2023F given the city's limit   ed land bank and slow regulatory approval. The new supply is mostly from suburbs of HCMC, such as Thu Duc City, Dist. 12, and Binh Chanh. Mr. Chu Duc Toan anticipates a lower primary pricing level because investors are more cautious about "golden locations" following the arrest waves involving large real estate developers.

"We do not expect a fall in secondary land prices at projects with transparency legal documents, which real-end users demand, as buyers in these projects are less sensitive to high inflation and mortgage rates. We saw several high-end low-rise projects in 9M22 still achieve a high take-up rate, such as The Classia, as buyers in this segment have high purchasing power and use property as an inflation hedge. However, we expect land secondary prices to fall in several hot areas, such as Cu Chi, Hoc Mon, and Binh Chanh, triggered by the stricter supervision on credit into hoarding properties and increasing further mortgage unaffordability", emphasized Mr. Chu Duc Toan.

HCMC’s neighboring provinces' ready-built housing markets are fading due to violations of authorities relating to the real estate market in 2023F. Developers kept speeding up sales activities in HCMC’s neighboring provinces in 3Q22, with new supply up 23.0% qoq to 2,656 units. According to DKRA and CBRE, the 3Q22 take-up rate fell by 14.5% pts qoq to 47% due to violations of authorities relating to the real estate market in these areas, resulting in a 5.8% qoq decrease in sales volume.

Mr. Chu Duc Toan believes that the property market in HCMC's neighboring provinces will be dull in 2023F as a result of sluggish homebuyer sentiment in these areas, which will impede housing purchase decisions.