Hanoi, HCMC see contrasting trends in Q1 residential real estate prices

By Vu Pham, Minh Hue
Tue, July 2, 2024 | 1:47 pm GMT+7

The residential indices in Hanoi and Ho Chi Minh City saw opposing trends in the first quarter of 2024, rising eight percentage points quarter-over-quarter in the capital city but decreasing slightly by two percentage points in the southern economic hub, according to Savills Vietnam.

 The prices of residential real estate in Hanoi increase while those in Ho Chi Minh City slighly decreased in Q1/2024. Photo by The Investor/Vu Pham.

The prices of residential real estate in Hanoi increase while those in Ho Chi Minh City slighly decreased in Q1/2024. Photo by The Investor/Vu Pham.

The Savills Property Price Index Q1/2024 showed that the residential index in Hanoi rose to 142.5 points, representing a substantial 37% rise since Q3/2019, with average prices at VND44 million($1,728) per square meter net sellable area (NSA).

Hanoi has prioritized infrastructure development, creating a foundation for sustainable long-term growth. Key projects will unlock affordable housing options, it said.

In Q1/2024, absorption in Hanoi hit 41%, increasing 15 percentage points (ppts) quarter-on-quarter and 27 ppts year-on-year. Grade B accounted for 88% of sales, while 45% of new supply was absorbed. Mega projects completed 71% of sales, reflecting continued demand for outlying areas.

“Confidence and stability are returning to real estate against a background of low bank deposit rates and regulatory reform,” according to Savills Vietnam.

Conversely, HCMC’s index declined two ppts quarter-on-quarter to 123 points due to project suspensions and weakened consumer confidence. Primary prices fell 3% to VND67 million ($2,633) per square meter of net sellable area (NSA).

Absorption dropped by 18 ppts quarter-on-quarter to 23%. New supply was 70% absorbed, while inventory limped its way to absorption of 16%.

Savills Vietnam held that amid diminished transactions and weakened consumer confidence, developers were cautious delivering stable selling prices and increased discounts. Some developers suspended projects to refine sales policies.

Moving to the suburbs - an inevitable trend

According to Do Thu Hang, senior director of advisory services at Savills Hanoi, the trend of moving to the outskirts is inevitable when the inner city sees limited land funds, projects, and supply. The city has been forced to invest in developing belt roads to reduce the load on the inner city and relocate residents to the suburbs.

Currently, there are new urban areas in regions far from the city center with synchronous and quality utilities, she said, adding they could see an increasing number of transactions, as people are more open to moving to suburban areas.

"This demand also comes from people who can work remotely. They do not need to travel much but can still enjoy synchronous utilities and good infrastructure and landscape. In the coming time, the relocation of many educational training institutions and public administrative offices will continue to promote this trend," Hang said.

The expert further said that in the primary market in Q1, the eastern area of Hanoi, including Gia Lam and Long Bien districts, ranked second in the city in the number of apartments sold. This area has a large land fund, with the presence of experienced developers.

In the fourth quarter of 2023 and the first quarter of 2024, among Hanoi’s suburban areas, Nam Tu Liem ranked first in the number of units sold, followed by Gia Lam and Long Bien.

Meanwhile, the trend of moving to the suburbs is also dominating in HCMC, amid scarce land funds and high primary housing prices, Hang stated.

HCMC people are tending to move to neighboring Binh Duong because many real estate businesses have flocked to the province to develop affordable housing. This year, it is expected that Binh Duong, Dong Nai and Long An provinces will account for 96% of the supply of apartments priced under VND5 billion ($196,430) a unit.

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