Housing prices keep rising as supply remains low

Housing prices have continued to rise in Hanoi and Ho Chi Minh City over new supply shortages, despite diminishing market liquidity, according to leading brokerage firm SSI Securities.

The company attributed the limited supply to Land Law amendments still being reviewed, as well as the possibility of tightened controls over corporate bond issuance.

The total number of newly licensed commercial housing projects fell 59% year-on-year in the first quarter of 2022, according to the Ministry of Construction.

New supply of apartments in Hanoi fell 20% year-on-year in the first quarter. The mid-end segment continued to dominate with 66% of total new launches, followed by the high-end one with 29%, while that of affordable units remained absent, real estate consultancy firm CBRE Vietnam noted in a report.

Research shows that primary prices averaged $1,655 per square meter in Hanoi, up 13% year-on-year. Of this, the mid-end segment experienced the strongest rise of 16% due to further upgrades in position of new condos in township developments.

The capital recorded 296 newly launched villas and townhouses in Q1, down 25% year-on-year, with average primary selling prices growing by 50% and 38% year-on-year, respectively. This was mainly due to infrastructure development and persistent interest in landed property products, the CBRE report said.

Meanwhile, the HCMC market reported only one subsequent phase of the Akari City with 884 condominium units in Q1, down 48% year-on-year, the lowest quarterly new supply since 2013, according to CBRE.

The selling price of apartments climbed by 7.8% year-on-year to $2,390 per square meter. The trend continued due to a structural shift from the affordable and mid-end to high-end and luxury segments. However, the growth rate has slowed down from 13% in 2021, the highest year-on-year growth in five years.

The HCMC landed property market also recorded 280 newly launched units, up 64.7% year-on-year, thanks to new launches from The Global City in District 2, Van Phuc City in Thu Duc District and Mizuki Park in Binh Chanh District. Primary selling price jumped 35.5% year-on-year to $5,910 per square meter, led by record prices of new supply in Thu Duc City, the CBRE report said.

Despite the spike in property prices, market liquidity has fallen 20% year-on-year, with 20,325 transactions in Q1/2022, according to the SSI report.

The broker noted that stricter bank loans and interest rate hikes might have an impact on demand, particularly for purchasers using financial leverage.

Furthermore, new property tax legislation requiring appropriate declarations of real estate transfer prices would likely have a significant influence on the market, as speculative activities will be strictly monitored, thus limiting the number of transactions, SSI analysts noted.

The report also said that land prices in some provinces have cooled off as authorities restrict the sale of agricultural land.