Apartment opening prices increase for 20 consecutive quarters

Savills Vietnam’s recent real estate market report shows that in Hanoi, the number of primary apartments was 11,911, down 40% quarter-on-quarter and 41% year-on-year. The average primary selling price reached VND58 million/m2, up 7% quarter-on-quarter and 12% year-on-year. The average opening price in this market has increased for 20 consecutive quarters.

According to Savills Vietnam, in Ho Chi Minh City, the supply of primary apartments has been on a continuous decline since 2017. In the fourth quarter of 2023, the primary supply reached 7,600 apartments, stable quarter-on-quarter but down 5% year-on-year. The average primary selling price in the quarter in Ho Chi Minh City returned to the 2020 level at VND69 million/m2, down 36% quarter-on-quarter and 45% year-on-year.

According to the recent real estate market report of the Ministry of Construction, in the fourth quarter of 2023, the market recorded 29 completed real estate projects with a scale of about 13,646 apartments deployed to the market. There are 47 projects eligible to sell future housing, with a scale of about 14,566 units; 854 projects are under construction with a scale of about 402,570 units.

In 2023, the whole country will have 67 newly licensed projects with a scale of about 24,993 units; 71 projects will have completed construction with a scale of about 29,612 units; 197 projects will be eligible to sell future housing. Apartment prices continue to increase in the two major cities of Hanoi and Ho Chi Minh City, especially in central areas.

According to the Ministry of Construction, the current real estate market has almost no projects in the affordable apartment segment, with prices below 25 million VND/m2, but mainly in the mid-range and high-end apartment segment with prices ranging from 25-70 million VND/m2. Of which, the selling price of affordable apartments is from 25-35 million VND/m2; mid-range apartments are priced at around 35-50 million VND/m2; high-end apartments are priced above 50 million VND/m2, commonly at 60-70 million VND/m2.

Apartment prices continue to rise?

According to Ms. Do Thu Hang - Senior Director of Savills Hanoi Consulting Services - the market is witnessing an imbalance between demand and supply of apartments in Hanoi, especially for products in the affordable segment. The metro line and ring roads, when completed, will promote the trend of gradually moving out of the center.

Ms. Giang Huynh - Deputy Director, Head of Research and S22M - commented that the supply of residential real estate in Ho Chi Minh City is currently very low, especially for a market of more than 10 million people. In Ho Chi Minh City, the profit from apartment investment has decreased slightly over the past 5 years, but is still higher than the interest rate of bank deposits. Therefore, apartments continue to be considered a profitable investment channel.

According to Mr. Nguyen Van Dinh - Chairman of the Vietnam Association of Realtors (VARS), the reason why the apartment market will continue to "reign" is due to the scarce supply, while the housing demand of people in large cities remains high. In addition, the preparation work for investment in real estate projects is prolonged, making it impossible for the supply to meet the demand immediately.

"Many projects have also been stalled due to legal problems, making supply even tighter. Therefore, apartment prices are likely to increase again in the near future," Mr. Dinh emphasized.

However, some experts also noted that apartment prices are quite high while the selling prices of low-rise products are at a reasonable level. This reality may create a trend of investors' cash flow closing the apartment segment and looking for low-rise products such as townhouses and villas in 2024.