Along with the positive growth in supply in the first half of the year, apartment prices in Ho Chi Minh City and surrounding areas tend to increase. So, how will the market play out from now until the end of the year?
Supply increases, high-end segment dominates
After 2 years of being affected by the Covid-19 epidemic, the housing market in Ho Chi Minh City and surrounding areas is having positive changes. Real estate is still considered a sustainable investment channel for medium and long-term investors.
In the first half of 2022, the apartment market in Ho Chi Minh City witnessed a sharp increase in supply. According to CBRE Vietnam, the supply of new apartments in the second quarter of 2022 was more than 15,500 units, exceeding the total new supply of the previous year. In which, the area with the most new supply is the East area, accounting for 88%.
The segment of high-end apartments with prices ranging from $2,000/m2 to $4,000/m2 dominated the market, accounting for 93% of the new quarter's supply. Meanwhile, the new supply of the mid-end apartment segment is very limited and the affordable segment has almost "disappeared".
However, the mid-end segment, which meets the majority of buyers' needs, is the most popular product in Ho Chi Minh City with a market share of up to 41% of the total accumulated supply of the whole market.
CBRE Vietnam's survey shows that the price increase of projects in the periphery not only contributes to changing the product segment structure in new supply but also increases the primary selling price.
The average primary price of the whole market reached $2,455/m2, up 2.7% QoQ and 8.6% YoY. The mid-end apartment segment benefited from price increases in the non-CBD area with an increase of 1.9% QoQ and 7% YoY, while the high-end segment decreased by 3.8%.
It is expected that this year, the apartment market in Ho Chi Minh City will have about 22,000 apartments, the high-end and luxury segments will lead the market. Average primary selling price in HCMC is expected to grow slowly as prices of new supplies are at the top of these two segments.
The supply of apartments in the mid-end and affordable segments from now until the end of the year will continue to come from the vicinity of Ho Chi Minh City such as Binh Duong, Dong Nai, Long An...
According to Ms. Duong Thuy Dung - Managing Director of CBRE Vietnam, after the pandemic, the housing market witnessed a change in the mindset of investors. Green and environmentally friendly elements are added to the project to meet the needs of buyers to improve the quality of life.
“The neighborhoods of Ho Chi Minh City are forecasted to continue to grow strongly due to the increasingly complete connectivity infrastructure and high prices in HCMC”, Ms. Dung said.
In the housing market report in Ho Chi Minh City and surrounding areas just released in the first 6 months of the year, DKRA Vietnam also recorded a strong increase in the supply of new apartments, up 96% over the same period last year. Ho Chi Minh City market leads the way when accounting for 75.6% of supply and 80% of consumption.
Secondary selling price is decreasing
Besides the positive signals in the first half of the year, the apartment market in Ho Chi Minh City in particular and the surrounding area in general is facing many difficulties. These are project legal issues, changes in relevant legal regulations and policies, rising material costs and especially the move to tighten real estate credit from banks.
Mr. Vo Hong Thang - Deputy Director of R&D DKRA Vietnam said that from now until the end of the year, the supply of new apartments in Ho Chi Minh City may decrease, ranging from 9,000 to 11,000 units, only 70% of the total. the begin of the year.
New supply in Binh Duong will remain at 3,000 - 4,000 units. The apartment market in Long An is only about 300 units. Meanwhile, other provinces and cities will be in short supply of new apartments.
“General demand as well as market liquidity may continue to be affected if banks' moves to tighten real estate credit do not have a timely solution. Under cost pressure, especially the cost of raw materials, the primary selling price may increase while the secondary selling price will not fluctuate much," said Mr. Thang.
The general difficulties of the housing market in Ho Chi Minh City and surrounding areas are forming a paradox, where the primary selling price increases but the secondary selling price decreases.
Dr. Dinh The Hien - Economist said that the period of 2020 - 2021 is the time when the Covid-19 epidemic occurred, although the economy declined, but house prices still increased sharply. There are many objective reasons leading to this situation, such as: Low-interest commercial bank capital poured into the market, supply scarcity, increased construction costs, infrastructure deployment in some areas...
In addition, other reasons come from buyers' psychology such as confidence that land prices will continue to increase, fear of currency devaluation due to inflation. Since then, many people have turned to investing in real estate.
According to Dr. Dinh The Hien, in Ho Chi Minh City alone, the sharp increase in house prices in some areas is due to the scarcity of new supply due to the inspection and inspection of a series of projects. Along with that, the legal process and procedures of the project were prolonged.
Regarding the secondary selling price, Dr. Dinh The Hien said that there was a local decrease in some projects that ended the loan grace period, the investor's interest rate financing or in some liquid products. low, speculative.
“Inflation and high interest rates will directly affect the solvency of leveraged customers. When faced with great pressure on interest rates, some investors accept to reduce part of profits to sell products at lower prices than expected, selling at a loss to recover capital. However, this development is only local in nature, the scale is not enough to represent the market”, analyzed by Dr. Dinh The Hien.
Experts forecast that, in the context of scarce supply and continuously escalating input costs, the increase in primary selling prices in the coming time will be difficult to stop. In the long term, if the market's difficulties are not removed, the drop in secondary selling prices becomes more pronounced, which will affect the whole market.
By VietNamNet