HCMC affordable housing supply at lowest level in decade: Savills

Affordable housing in Ho Chi Minh City continues to be scarce as the supply of new Grade C apartments has plunged 45% annually since 2020, reaching about 1,300 units in 2024 - the lowest level in a decade, according to property consultancy Savills Vietnam.

The supply of primary units priced below VND50 million ($1,965) per square meter has decreased by 20% year-on-year, accounting for only 15% of the total primary supply.

Savills Vietnam’s recently released HCMC market report showed that the primary supply in the apartment segment reached about 6,500 units in Q4/2024, up 35% quarter-on-quarter but down 13% year-on-year. The new supply included more than 2,700 units, soaring 243% quarter-on-quarter but still 3% lower compared to the previous year.

In 2024, the primary supply climbed 10% year-on-year to nearly 11,900 units.

According to the firm, sales in Q4/2024 reached 2,700 transactions, a 43% increase quarter-on-quarter but a 10% decrease year-on-year, with an absorption rate of 42%.

The sales of high-end units priced above VND80 million ($3,143) per sqm surged 561% quarter-on-quarter and 2,118% year-on-year, accounting for 76% of total transactions.

The average price of apartments in the southern hub in the quarter reached VND91 million ($3,575) per sqm, a rise of 36% quarter-on-quarter and 33% year-on-year, driven by new high-priced supply and price hikes in existing projects.

Last year, sales increased by 29% year-on-year, totaling 8,000 transactions, led by Grade B apartments. Grade B units accounted for the highest proportion at 67%, followed by Grade C (28%) and Grade A (5%).

Troy Griffiths, deputy managing director of Savills Vietnam, noted that in 2024, apartments priced at or below VND50 million ($1,965) per sqm made up only 18% of total sales, a sharp decline from 2020 when this segment represented nearly 50% of sales. Transactions in this segment also dropped 39% annually since 2020.

The scarcity of affordable housing has led buyers with moderate budgets to look for properties in neighboring areas such as Binh Duong, Dong Nai, and Long An, where apartment prices range from VND30-40 million ($1,570) per sqm, he said.

This shift in demand has driven apartment sales in Binh Duong to grow by over 200% year-on-year, he added.

Both supply and market sentiment are improving, but prices remain high. Demand continues to shift towards neighboring provinces with more affordable prices and better infrastructure development, said Griffiths.

Looking ahead, he predicted that in 2025, more than 10,000 units will be offered for sale, with Grade B apartments making up 54% of the total. By 2027, the future supply is expected to reach about 46,000 units from 69 projects, with Thu Duc city expected to account for 52%, Binh Tan district 11%, and District 7 10%.

HCMC housing prices may increase 15-20%

Commenting on the HCMC real estate market, Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association (HoREA), stated that over the past five years (2020-2024), the city has experienced a significant decline in the supply of commercial housing projects, leading to a sharp drop in the supply of commercial housing products.

There has been a serious shortage of affordable housing and social housing, which are essential for the majority of the population with average and low incomes, including government employees, armed forces personnel, workers, and immigrants.

"In 2020, the number of affordable housing units in HCMC was only 163, accounting for 1%, but since 2021, there have been no affordable housing products," he said.

According to Chau, the high-end housing segment continues to dominate the city’s property market. Specifically, it accounted for 70.6% in 2020, 72% in 2021, 78.3% in 2022, 68.55% in 2023, and 100% in 2024.

He believed that the continuous increase in housing prices over the past years is due to the scarcity of commercial housing projects, which has led to a continued shortage of commercial housing supply under the law of supply and demand. Apartment prices rose about 15-20% between 2015 and 2023, and with the 2024 adjusted land price framework, housing prices could expand by 15-20% in 2025.

Meanwhile, real estate expert Nguyen Hoang emphasized that the shortage of supply and the prolonged project delays have led to rising housing prices in major urban areas like HCMC. Additionally, the new land price bracket will impact businesses, increasing investment costs, meaning housing prices are unlikely to fall.

Notably, although people's incomes have improved, they have not kept pace with the rapid rise in housing prices. Apartments priced below VND50 million ($1,965) per sqm in HCMC are almost nonexistent.

Currently, projects expected to launch in 2025 will mostly be mid-range and high-end, with prices starting at over VND50 million per sqm, he added.