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HCMC apartment market lacks new supply of affordable units

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The housing demand in Ho Chi Minh City in 2021-2025 is estimated at 45 million square metres. VIETNAM NEWS AGENCY

HCMC apartment market lacks new supply of affordable units

High- and mid-priced apartment projects continued to lead the Ho Chi Minh City (HCMC) market in terms of new supply in the first quarter, with affordable units remaining scarce, according to real estate consulting firms.

With 4,900 units, primary stock was down 56 per cent quarter-on-quarter and 31 per cent year-on-year, according to Savills Vietnam’s quarterly report on the city property market.

Grade B led primary supply with a 57 per cent share. New urban areas in districts 2, 7 and 9 had a 78 per cent share of Grade B primary supply.

Quarterly sales of less than 2,100 were the lowest in five years and represented a quarter-on-quarter decrease of 76 per cent and year-on-year decrease of 56 per cent, mostly due to lower primary supply.

A higher rate of large-sized units with higher unit prices has slowed performance at existing developments, Vo Thi Khanh Trang, associate director of research at Savills, said.

Prices moved up across all grades, especially in new phases of existing developments, where unit prices increased by six per cent over their previous launch, she said.

There is very limited supply of affordable units with primary prices of under $1,000 per square metre and new supply would steadily fall in the coming years, she said.

Limited land availability in central areas are pushing up prices of apartments, she added.

According to DKRA Vietnam, the prices of affordable apartments doubled between 2013 and 2020 to 30-32 million dong ($1,300-1,380) per square metre.

In the first quarter of this year, they went up by another five-to-10 per cent.

Even in neighbouring provinces such as Binh Duong and Dong Nai, apartment prices have jumped to 33-45 million dong per square metre.

Grade A led primary supply last year with a 69 per cent share while supply of Grade C was almost zero, according to a report by DKRA.

In the first quarter of this year Grade A continued to lead the HCMC apartment market in terms of new supply and there was very limited supply of affordable units, it said.

A study by the HCMC Real Estate Association showed that high- and mid-priced units accounted for 70 per cent and 25 per cent of apartment supply last year.

The affordable segment accounted for only one per cent of the primary market at a mere 163 units.

Le Hoang Chau, chairman of the association, said an apartment project with initial listing of 30-33 million dong per square metre is now sold at 50-55 million dong.

It is simply raised to a higher grade and sold at higher prices, making it impossible for end users to afford it, he said.

A survey by the HCMC Institute for Development Studies estimated the housing demand in the city in 2021-2025 at 45 million square metres.

The limited supply of affordable apartments and rapid increase in prices mean apartments are bought for speculative purposes.

Around 70 per cent of high- and mid-priced apartments are left unoccupied as a result, the survey found.

VIET NAM NEWS/ASIA NEWS NETWORK

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