High- and mid-priced apartment projects continued to lead the HCM City market in terms of new supply in the first quarter, with affordable units remaining scarce, according to real estate consulting firms.
Apartment buildings in HCM City. (Photo: VNA)
With 4,900 units, primary stock was down 56 percent quarter-on-quarter and 31 percent year-on-year, according to Savills Vietnam’s quarterly report on the city property market.
Grade B led primary supply with a 57 percent share. New urban areas in districts 2, 7 and 9 had a 78 percent share of grade B primary supply.
Quarterly sales of less than 2,100 were the lowest in five years and represented a quarter-on-quarter decrease of 76 percent and year-on-year decrease of 56 percent, mostly due to lower primary supply.
A higher rate of large-sized units with higher unit prices has slowed performance at existing developments, Vo Thi Khanh Trang, associate director of research at Savills, said.
Prices moved up across all grades, especially in new phases of existing developments, where unit prices increased by 6 percent over their previous launch, she said.
There is very limited supply of affordable units with primary prices of under 1,000 USD per square metre and new supply would steadily fall in the coming years, she said.
Limited land availability in central areas is pushing up prices of apartments, she added.
According to DKRA Vietnam, the prices of affordable apartments doubled between 2013 and 2020 to 30-32 million VND (1,300-1,380 USD) per square metre.
In the first quarter of this year, they went up by another 5-10 percent.
Even in neighbouring provinces such as Binh Duong and Dong Nai, apartment prices have jumped to 33-45 million VND (1,430-1,950 USD) per square metre.
Grade A led primary supply last year with a 69 percent share while supply of grade C were almost zero, according to a report by DKRA.
In the first quarter of this year grade A continued to lead the HCM City apartment market in terms of new supply and there was very limited supply of affordable units, it said.
A study by the HCM City Real Estate Association showed that high- and mid-priced units accounted for 70 percent and 25 percent of apartment supply last year.
The affordable segment accounted for only 1 percent of the primary market at a mere 163 units.
Le Hoang Chau, chairman of the association, said an apartment project with initial listing of 30-33 million VND (1,300-1,430 USD) per square metre is now sold at 50-55 million VND (2,160-2,380 USD).
It is simply raised to a higher grade and sold at higher prices, making it impossible for end users to afford it, he said.
A survey by the HCM City Institute for Development Studies estimated the housing demand in the city in 2021-25 at 45 million square metres.
The limited supply of affordable apartments and rapid increase in prices mean apartments are bought for speculative purposes.
Around 70 percent of high- and mid-priced apartments are left unoccupied as a result, the survey found./.