The supply of housing in Hanoi and Saigon fell sharply

The second quarter recorded the lowest supply of houses in Hanoi and Ho Chi Minh City since 2014, pushing up selling prices.

Jones Lang LaSalle (JLL) Vietnam has just announced the housing market report in Ho Chi Minh City and Hanoi in the second quarter of 2019 with the supply plunging, while the house price continued to escalate. In the last 3 months, the number of newly opened houses in Saigon has reached more than 4,100 units. This is a record low since the market recovered in 2014. The main reason is the recent construction approval procedure.


The scarcity of goods has pushed up house prices, raising the average market price level to a new higher level than before. The average primary market price reached USD 2,009 per square meter, up 21.6% year-on-year. Meanwhile, the high-end segment increased by 52.9% year-on-year, at $ 4,569 per square meter in the second quarter of 2019, thanks to the participation of a number of luxury projects in the central region with outstanding prices due to the scarce land.


Apartment market in East HCMC. Photo: Tran Quynh

Although the supply decreased, more than 4,300 units were sold in the second quarter of 2019 (including the new project to sell and sell more products in the old project), equivalent to the amount of goods sold in the previous quarter. Mid-end segment projects with prices ranging from $ 1,200 to $ 2,000 per m2 attract the most buyers. However, buyers of apartments for investment began to shift the investment trend from high-end apartments to townhouses and villas to achieve a higher rate of return with the same amount of investment capital.


Strict policies for approving and licensing new projects have had a more sustainable impact on supply. In particular, many projects are required to complete legal obligations related to land and construction permits before proceeding with the sale.


In the context that the process of waiting for construction approval continues to be delayed, the amount of open sales expected in 2019 will decrease and fluctuate strongly, ranging from 18,000 to 28,000 units (much lower than in previous years). However, JLL judged that the demand for housing in the HCMC market remained very high.


For Hanoi market, JLL said that after a period of strong growth, the supply from new open-selling projects tends to slow down. Sales for the quarter reached 5,900 units, nearly half of the previous quarter's supply, mainly coming from the next phase of existing projects.


"This is the lowest recorded level since the market recovered in 2014. Most new open-sale projects are small with less than 500 units," JLL said.


In order to attract buyers, in the context of increasingly tight supportive lending policies, investors still maintain stable prices, applying many preferential sales policies to accelerate inventory. Policies applied include extended installment periods, 3% to 6% cash discounts for customers who do not use the loan package.


The amount of apartments sold in the quarter reached over 4,660 units, 65.3% lower than the previous quarter. Demand for investment was cool in the quarter after the period of strong growth. Increasing interest rates and being more cautious in the process of approving bank loan documents makes it harder for borrowers to buy houses. However, the demand for accommodation for the affordable and mid-end segments remains good.


According to Vu Le – Nguyen Ha