Prices of primary market apartments in the southern economic hub of Ho Chi Minh City had risen four times higher than in the capital Hanoi, showed a Q2 real estate report by property consultancy firm Savills Vietnam.
HCMC’s housing price index in Q2 stood at 131 points, up one point quarter-on-quarter and two points year-on-year. The average selling price in the city's primary market was VND125 million ($5,120) per square meter, up 5% from the previous quarter and 40% over the same period last year.
Savills Vietnam said that with a large inventory in the high-priced Grade A and B segments, selling prices in the secondary market had also increased. District 3 saw the highest price hike of 6% quarterly, followed by Thu Duc city at 5%.
Notably, the absorption rate (the rate of available homes that are sold in a specific market during a given time period) in the city in Q2 was the lowest ever at 5%, down 7 percentage points quarter-on-quarter and 62 percentage points year-on-year.
The consultancy said it believed that the complexity of the capital market, slow planning approval processes and a supply-demand imbalance continued to impact both project developers and real estate buyers.
In Hanoi, the housing price index was stable quarter-on-quarter at 130.4 points, with the average apartment price hitting VND39 million ($1,600) per square meter. This index surged 25% from its bottom of 104.1 points in Q3/2019. In Q2/2023, the absorption rate reached 12%, down 1 percentage point quarter-on-quarter but stable year-on-year.
Troy Griffiths, deputy managing director of Savills Vietnam, said that this quiet situation will continue until deposit interest rates decrease and new supply is added to the market.
DKRA Group, another consultancy firm, said that in August, HCMC apartment prices in the primary market recorded the highest level of VND312.7 million ($12,800) per square meter and the lowest at VND58 million ($2,370) per square meter. In neighboring provinces such as Ba Ria-Vung Tau and Binh Duong, apartment prices averaged VND40-50 million ($2,050) per square meter.
Real estate services firm Cushman & Wakefield's data showed that apartment prices in HCMC in Q2 hit about $3,200 per square meter, up 16% over the same period in 2022. The price hike was seen in most segments, from mid-end to high-end.
According to Batdongsan.com.vn, a leading real estate website in Vietnam, most apartment projects in HCMC offered for sale recently were in the mid-end and high-end segments, with prices reaching VND55-70 million ($2,860) per square meter. Products with lower prices derived from old projects.
Vo Huynh Tuan Kiet, director of CBRE Vietnam’s housing department, said that it is very difficult for families to buy houses in HCMC now. On average, the current price in the city is about VND4-5 billion ($205,000) per two-bedroom apartment, with an area of about 60 square meters.
“With the average household income of about VND20 million ($820) per month, even if they can save 40-50% of their incomes, it will still take them several decades to own a house outright if there is no support from relatives," he added.
There are now very few projects priced at about VND40 million ($1,640) per square meter in HCMC. Even in markets like Dong Nai and Binh Duong, apartment prices exceed that figure.
Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association (HoREA), said that the real estate market needs affordable products to meet investment needs, avoiding a supply-demand mismatch.
Currently, high-end products account for up to 70-80% of the market while affordable commercial housing and social housing are in short supply, he noted.
Due to the lack of supply, some developers have converted their mid-end or even low-end commercial housing projects into high-end ones to maximize profit, leading to a supply-demand mismatch, he added.