Like HCMC, the residential market in Hanoi saw a downward trend in the second quarter of this year when many secondary investors who tried to run away from the market agreed to resell their properties even at a loss to redeem capital given the increasing pressure in the market.
Meanwhile buyers have shown prudence in purchasing homes, waiting for housing prices as well as banking interest rates to drop further.
In its quarterly report, Savills Vietnam says the average secondary asking price in the residential market in Hanoi decreased by 1 percent against the previous quarter.
Except for areas such as Gia Lam, Cau Giay, Thanh Xuan and Long Bien where the asking price remained stable or slightly increased, the asking prices in the remaining districts decreased by 2 percent to 8 percent in the second quarter.
The primary market saw 17 active projects with some 3,400 units, with prices ranging from US$800 to $3,200 per square meter.
However, the primary stock was 50 percent less than in the previous quarter, and the overall apartment market had a low absorption rate of 16% in the second quarter.
Apartments with the lowest asking price had the highest absorption rate. Grade C recorded the highest absorption rate at 26 percent, followed by Grade B at 11 percent and Grade A at 5 percent, according to the report.
Commenting on the market, Savills said with more than 50 percent of the population aged under 30, the apartment market in Hanoi still had potential in the long-term.
However, the current tighter monetary policy had made it more difficult to acquire bank financing, which is limiting demand.
With the same view, Knight Frank Vietnam said except for the retail market, the Hanoi property market experienced a general slowdown in activity for most asset classes in the second quarter as the government’s restrictions on bank loans to non-manufacturing sectors continued to strangle credit to the property market, with developers and home buyers alike having difficulties raising finance.
The property services provider said the second quarter saw less activity in the apartment market than in the previous quarter, and a lower number of successful transactions of units. In general, the market performance on the demand side remained relatively flat during the first half of this year in all segments.
Mid-end and affordable projects continued to dominate the market as developers target the stronger demand from owner occupiers in these segments. Apartments with prices from VND1 billion to VND2 billion per unit have been growing due to urbanization, population growth and modest income levels.
Knight Frank said although prices had become more affordable, sales for many developers were expected to be difficult. This was due to the large amount of choice availability in the market.
In addition, there was likely to be more end users in the market than investors, as the apartment for sale market is considered to be not as lucrative as before.
According to the company, new supply will continue to come onto the market in the coming quarters, although completion dates of projects are not always fixed and can vary from initial estimates.
Specifically, the market is expected to welcome about 2,000 units from mid-end projects such as Green Park Tower, Golden Land and Hoa Binh Green City in the next quarter. Prices of these projects are expected to be in the range of US$1,500 to US$1,800 per square meter.
Commenting on the market trend, Knight Frank said as current supply remained high, buyers would have more choices and were becoming more aware of the available options. Therefore, differentiation and customer centered orientation would be a number one tactic for smart developers.
The performance of the apartment market would be directly linked to inflation, and once inflation comes under control and the monetary policy is relaxed, the apartment sector will pick up in activity.
However, some projects are on hold as developers are waiting for confidence to come back to the market before launching their projects.
Meanwhile, some developers who have launched their projects are looking for ways to clear stocks, including leasing their apartments.
Some experts projected that sluggish sale and increasing stock would continue to put more pressure on the apartment market, and apartment selling prices in both HCMC and Hanoi would keep softening toward the year-end.
According to Savills, the residential market in Hanoi will see 31,000 new units contributed by 60 condo projects across the city in the next three years.
TBKTSG