HCM City: Townhouse and villa transactions in Ho Chi Minh City have fallen to the lowest in the last five years with their primary supply reaching only 40% and a low absorption rate, according to real estate consultancy Savills Vietnam.
Moreover, most of the townhouses and villas are priced at over 30 billion VND (1.2 million USD), exceeding the affordability of the majority of house buyers in the city.
According to Savills Vietnam, last year, the primary supply of townhouses and villas in Ho Chi Minh City saw a year-on-year decrease of 40% to 993 units, the lowest in the last five years.
In addition, only 286 units were sold last year, marking a year-on-year reduction of 73% and the absorption rate drop to 29%.
Explaining the slowdown, Giang Huynh, associate director at Savills Vietnam, said that the capital mobilisation process is still affected by the inspection of real estate bond issuance. In addition, the world’s economic and political developments leave heavy impacts on the domestic economy, causin
g the incomes and cash flow of businesses and people to be blocked.
On the other hand, the scarcity of land funds in the inner city area of Ho Chi Minh City has pushed up house prices, leading to reduced affordability. Because of limited supply, investors gradually target the high-end housing segment, thus narrowing the buyer pool and slowing the absorption rate significantly.
She said the scarcity of land in the city has pushed up housing prices.
According to its urban development plan, by 2030, the city will focus on high-rise buildings to optimise land plots and meet the large housing demand.
This year 1,400 of them will enter the market, with 65% being priced at VND20-30 billion each, Savills has forecast.
Housing demand tends to shift to neighbouring provinces. Specifically, Binh Duong will have more than 3,400 new apartments, more than 90% of which cost less than 10 billion VND. Dong Nai will have 2,900 new apartments, 41% of which are priced at 5-10 billion VND and 29% priced at 10-20 billion VND.
According to Giang, Dong Nai and Binh Duong have the advantage of developing low-rise houses to supply the Ho Chi Minh City market. When infrastructure is upgraded and developed harmoniously, travel time from the provinces to Ho Chi Minh City will be cut, so housing prices become more reasonable and housing products are more diverse, which helps make demand stronger.
Seeing that trend, in recent years, big investors have acquired land funds in these suburban markets to deploy large-scale projects. Besides, housing prices in neighbouring provinces are more competitive than those in Ho Chi Minh City. The average primary selling price in Binh Duong and Dong Nai is just 16% and 22% of that in Ho Chi Minh City, Giang said.
Savills Vietnam forecasts that the supply of townhouses in Ho Chi Minh City in 2026 will reach nearly 5,500 units, equal to 78% of Binh Duong and 40% of Dong Nai.
The largest future supply with 1,500 units will be in the suburban district of Binh Chanh, followed by Thu Duc city with 1,300 uni
ts and Nha Be district with 1,000 units./.
Source: Vietnam News Agency