As the pandemic-induced trend of "moving to the suburbs" is dying off, homeowners are rushing to liquidate their real estate in the outskirts to cut losses.
The trend started in 2021 as the pandemic has made people become more health-conscious. Well-off families were willing to spend billions of VND on a house away from the city centre to enjoy a healthy outdoor life.
The growing demand for suburban housing has attracted scores of flippers aiming to get in on the ground floor and then make a quick resale to gain profits. However, their strategy worked for a while but no longer because of the downturn in the realty sector.
Mr. Khang, a real estate agent in Hoa Binh Province, said the demand for suburban housing was at its peak between 2020-2021, during which he sold nearly 10 houses monthly.
The situation began to change in mid-2022 as living away from the city was no longer appealing to homebuyers. The weakening demand left flippers with no choice but to slash prices to quickly move out of the unprofitable sector.
"Houses in suburbs sell poorly now as the market has come to a standstill. Certain houses take me more than four months to sell," said Khang.
Mrs. Thu living in Ha Noi spent VND2 billion (US$85,219) on a land plot in Hoa Binh Province in 2021 to build a house for weekend getaways. The house came into use later that year with a construction cost of VND900 million.
She initially visited the house once per week but later with far less frequency because of losing interest. Fewer and fewer visits have gradually pushed the house into disuse.
"I visited the house once since late 2022. It is going to pot, so I've put it up for sale to recoup its costs," said Thu.
Thu is selling both the land and the house for VND2 billion, about VND900 million lower than the initial outlay, but no deal has been reached for the past month.
Another homeowner said he paid VND2.3 billion to buy a land plot in Ba Vi District and an additional VND1 billion to build a house on the land in 2020.
As the house hasn't been used since its inauguration, its condition is deteriorating quickly. He has wasted no time in selling both the house and the land for VND2.2 billion before housing prices could fall further.
"I have gone so far as to accept a loss margin of 30 per cent to liquidate the real estate," said the homeowner.
With a loss margin of 30 per cent, his situation was better than most homeowners in the same district. For instance, land plots in Yen Bai Commune are selling for about VND2.5 million per sqm, against VND4.5 million per sqm last year.
In Tan Linh and Ba Trai Communes, real estate prices fell from about VND4 million per sqm to VND2 million per sqm.
"Prices are falling because the trend of moving to the suburbs is over," said a real estate agent. — VNS