The house price index on income dropped from 34 in 2016 to 21 in 2018 due to the strong growth of the upper and middle classes. Particularly in Hanoi, the house price index on income is 17, better than the national average.
According to Savills, in the first quarter of 2019 there were about 9,700 newly launched apartments on the market, down 36% quarter-on-quarter but up 76% year-on-year. All segments recorded a drop in new sales due to temporary business activities during the Lunar New Year.
Supply and volume of apartment transactions in Hanoi market are "plunging" in the first 3 months of the year. Photo: Minh Thu
The Grade A segment recorded a new sales drop of 84% qoq while grades B and C decreased 35% qoq. The number of units sold is about 9,800 units, up 70% year-on-year. However, compared to the quarter, the number of units sold decreased by 14% due to the long Tet holiday.
However, Ms. Do Thu Hang - Director of Research Department Savills Hanoi said that the apartment market for sale is still operating stably, the foundation of the market is very good as the population has a good growth rate and rapid urbanization speed, the household size is decreasing and the number of single households is increasing.
“Vietnam's affordability to buy houses has been improved in the last three years. The house price index on income dropped from 34 in 2016 to 21 in 2018 due to the strong growth of the upper and middle classes. Particularly in Hanoi, the house price index on income is 17, better than the national average. The amount of goods sold increased from 2014 at a rate of 28% per year” said Ms. Hang.
Besides, Ms. Hang said, the mid-end apartment segment is growing and leading the market. Specifically, in quarter 1/2019, Grade B apartment segment continued to lead the primary supply with 22,500 units, equivalent to 65% market share.
The Hanoi apartment market is supported by a large demand, while the attractive high-end segment with a small amount of wealthy domestic and foreign buyers. Large demand from buyers and investors led to large volume of B-class transactions, accounting for 70% of total transactions and the highest increase in three segments reaching 99% by year. Investors offer attractive prices, average selling price of class B is about 1,390 USD/m2, down by 2% QoQ but up by 8% YoY.
The product lines in the market have a clear differentiation, for apartments of class B or C class with small area trend; while the high-end segment is aiming for larger area, over 100m2.
According to Savills, Hanoi's future still receives a huge supply, about 44,000 units from 34 current and future projects will be launched in 2019. In which, Grade B apartments will still lead the market.
Along with that, while 5 satellite towns of Hanoi face many difficulties in attracting investment capital, allocating population and housing for workers, big investors like Vingroup and BRG are implementing Large projects in Gia Lam and Dong Anh districts such as VinCity Ocean Park (420 ha), BRG Smart City (272 hectare)... These projects are considered sustainable solutions for reducing population pressure, traffic congestion, and lacking of infrastructure.
According to Minh Thu