No affordable townhouses, villas in HCMC: realtor

Ho Chi Minh City will not have townhouses/villas priced under VND5 billion ($197,400) in the next two years and only 10% of primary supply will cost less than VND10 billion, says a Savills Vietnam report.

The report also says that this segment will boom in neighboring Binh Duong and Dong Nai provinces.

In the first half of 2024, the HCMC market continued to see a lack of affordable housing products with the average selling price of primary apartments reaching VND72 million ($2,843) per square meter.

The supply of apartments under VND3 billion ($118,460) has become increasingly scarce in the southern hub, accounting for just 18% of primary supply in the first six months of 2024, mainly located at distances of more than 10 kilometers from the city center.

HCMC’s real estate market will face big challenges when this segment makes up less than 5% of apartment supply in the next three years, the report cautions.

Giang Huynh, head of Research & S22M at Savills Vietnam, said a two-bedroom apartment priced under VND3 billion ($118,460) is considered affordable in HCMC. However, at present, most such apartments have been sold.

“New and future supply of low-cost housing will mainly come from Binh Duong, which borders HCMC. Therefore, buyers looking for affordable housing in HCMC will have to move to this area," she said.

Giang said the 10-million-strong city had just 668 primary townhouse and villa products now, with 72 transactions recorded in Q2, reflecting a market decline like the one in the apartment segment.

"Due to the lack of supply, primary prices of townhouses have continued to rise. The inventory (in this segment) is dominated by high-priced products," she said, adding that more than 77% of the total primary townhouse supply was priced at over VND30 billion ($1.18 million) per unit. Most of these high-end products are located in urban areas in Thu Duc city.

Giang said high prices of primary goods, competition from the secondary market and availability of affordable products in neighboring provinces have caused difficulties for the HCMC market.

The absorption rate of villas priced above VND30 billion was just 6% in the second quarter. Townhouses saw the highest absorption rate of 31% as they meet real needs and have competitive prices, she noted.

The Savills Vietnam report said HCMC will not have any townhouse/villa priced under VND5 billion ($197,400) in the next two years and that just 10% of primary supply will cost less than VND10 billion.

Meanwhile, products at this price will account for 85% and 55% of supply in neighboring Binh Duong and Dong Nai, respectively.

"In the second half of 2024, 883 low-rise houses are expected to be launched, mainly from subsequent phases of existing projects. Products priced at over VND20 billion ($789,734) will make up 80% of future supply. By 2026, the supply is expected to reach 4,663 units, mainly in Thu Duc city, Binh Chanh and Nha Be districts," Giang said.

Given the current paucity of land funds, HCMC house prices have tripled in the primary market and doubled in the secondary market over the past five years. This has prompted home buyers with real needs to look for more suitable products in neighboring provinces, she added.