Q2 housing supply in HCMC triples, budget apartments becoming scarce

By Vu Pham, Hai Yen
Fri, July 12, 2024 | 11:03 am GMT+7

New apartment supply in Ho Chi Minh City, Vietnam’s southern metropolis, surged by 87% quarter-on-quarter and 215% year-on-year to 1,186 units in the second quarter of this year, according to Savills Vietnam.

Primary apartment supply hiked 14% quarter-on-quarter but declined 3% year-on-year to 5,635 units, said the firm’s Q2 HCMC real estate report.

 Apartment complexes in Ho Chi Minh City, southern Vietnam. Photo courtesy of Nguoi Lao Dong (Laborer) newspaper.

Apartment complexes in Ho Chi Minh City, southern Vietnam. Photo courtesy of Nguoi Lao Dong (Laborer) newspaper.

In the first half of this year, the city’s primary apartment supply stood at 6,751, of which 57% were mid-end apartments, 39% were low-end apartments, and 4% were high-end apartments. Primary apartments were mainly scattered to the east of the city, with a 57% share, followed by the west with 29%.

During Q2, apartment transactions doubled quarter-on-quarter and soared 606% year-on-year to 2,302, accounting for nearly 70% of total sales in H1.

The Q1 apartment absorption rate hit 41%, up 18 percentage points (ppts) quarter-on-quarter and 36 ppts over the year. The rate for new apartments was 72%, up two ppts and four ppts, respectively; and 33% for inventories, up 17 ppts quarter-on-quarter and 29 ppts year-on-year.

In H1, the average selling price of primary apartments in HCMC was VND73 million ($2,871) per square meter. Specifically, the selling prices of mid- and low-end primary apartments remained steady over the year, while the price of high-end apartments decreased 41%.

Notably, low-cost apartments in HCMC, typically priced at VND3 billion ($117,980) for a 65-sqm unit, have become increasingly scarce. They accounted for only 18% of the primary supply in the first half of the year and were mainly located more than 10 kilometers from the city center, according to Savills. This situation raises concerns about affordability, as budget apartments are expected to represent less than 5% of the supply within the next three years.

According to the Ministry of Construction, budget apartments should be priced at VND25-30 million ($983-$1,180) per sqm, or about VND1.6 billion ($62,920) for a 65-sqm unit. Hanoi is also currently void of this kind of apartment, excluding social housing.

Increasing housing demand amid limited supply is expected to drive a shift to Ho Chi Minh City’s neighboring provinces, such as Binh Duong and Dong Nai. These provinces are projected to add nearly 24,000 affordable apartments in the next three years. Notably, 80% of new apartment transactions in Binh Duong were made by buyers from HCMC.

Su Ngoc Khuong, senior director at Savills Vietnam, forecast that the supply of affordable apartments in HCMC will not improve for the rest of this year because upcoming projects will predominantly be mid- and high-end developments.

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