Continued Challenges
According to Savills, in the fourth quarter of 2023, the Hanoi housing market recorded the lowest new supply in 10 years for both low-rise and apartment segments.
For the apartment segment, Savills Vietnam’s market report shows that in the fourth quarter of 2023, supply increased 52% quarter-on-quarter but decreased 1% year-on-year to 2,876 units. Primary supply reached 11,911 units, down 40% quarter-on-quarter and 41% year-on-year. However, the new supply recorded in the quarter only reached 10,403 units, of which grade B accounted for 84% of the supply.
For the low-rise segment, in 2023, the total new supply reached 272 units, down 82% year-on-year. The new supply has 87 units, including 58 units from the new Solasta Mansion project in Ha Dong and 29 units from the existing An Lac Green Symphony project in Hoai Duc. Primary supply reached 710 units from 16 projects, down 2% quarter-on-quarter and 23% year-on-year. Townhouses are the main product with a market share of 44%.
The popular price range for both segments remains high. In particular, apartments priced from 51-70 million VND/m2 accounted for 63% of the new supply, up 24% year-on-year. Apartments in this price range accounted for 49% of the total units sold, up 21% year-on-year. Apartments priced above 4 billion VND accounted for 42% of the units sold in 2023, up from 3% in 2019. Apartments priced from 2 to 4 billion VND accounted for 55% of the market share. Only 3% of the units were priced below 2 billion VND.
In addition, although most developers did not adjust prices, low inventory of high-priced low-rise products caused primary prices to rise. For example, the primary villa price increased 55% quarter-on-quarter to 160 million VND/m2 mainly due to low-priced inventory in Me Linh that was sold in the third quarter of 2023. The townhouse price increased 3% quarter-on-quarter to 194 million VND/m2. The shophouse price also increased 3% quarter-on-quarter to 328 million VND/m2.
According to Ms. Do Thu Hang, Senior Manager, Research & Consultancy Department, Savills Hanoi: “The continued growth in housing prices is due to the increasing costs of land and construction, developing infrastructure and improved quality. Supply limitations in the market continue to lead to high average primary selling prices throughout the market.”
The number of apartments sold in the fourth quarter of 2023 reached 3,045 units, up 45% quarter-on-quarter and 5% year-on-year. The new supply had an absorption rate of 46%. In contrast, the low-rise segment had the lowest transaction volume in many years. The number of transactions in the fourth quarter of 2023 decreased 37% quarter-on-quarter and 67% year-on-year. The absorption rate in the quarter reached only 9%, down 5 percentage points quarter-on-quarter and 12 percentage points year-on-year. In 2023, only 359 units were sold, the lowest since 2014. The total number of low-rise transactions decreased 76% year-on-year and the absorption rate in 2023 reached 36%, down 31 percentage points year-on-year.
Ms. Do Thu Hang, Senior Manager, Research & Consultancy Department, Savills Hanoi
Regarding the low absorption rate, Ms. Hang analyzed: “Current buyers still have concerns. In fact, the number of apartments sold in the fourth quarter of 2023 is mainly from projects with reputable developers, ensuring legal compliance and fulfilling financial obligations. Therefore, although there is support in terms of interest rates for housing needs, buyers still have certain concerns about legal factors. Moreover, banks are also concerned about developers not completing legal obligations with projects to complete the loan procedures. This invisibly affects the buyer’s decision and the number of houses sold, while explaining the fact that although interest rates have decreased, the absorption rate is still not high.”
What opportunities are there for buyers with real housing needs?
According to Ms. Hang, in the limited supply and high primary prices, opportunities for buyers with real housing needs may lie in the secondary market. The secondary market has advantages in affordability, more choices that are suitable for payment capabilities, and guaranteed legality. For example, the average price of secondary villas per m2 of land is 7% lower than the average primary price, secondary townhouses have prices 24% lower than primary products, and secondary commercial townhouses have prices 40% lower than primary products on the market.
At the same time, homebuyers can expect new supply from developing infrastructure. Infrastructure investment projects such as Ring Road 3.5 and 4 will expand the Hanoi housing market, targeting decentralized supply in suburban areas and central areas. Developing infrastructure will drive housing demand to provinces and surrounding areas with reasonable prices and larger land funds.
The Savills report also states that this is a positive point for supply, as housing products in outlying areas and surrounding provinces will increasingly meet the housing needs of Hanoi.
Accordingly, in 2024, the market will receive an additional 12,100 new apartments, with 87% market share in Hoang Mai, Nam Tu Liem, and Ha Dong districts. Hung Yen and Bac Ninh will supply about 203,000 units from 2024 to 2026. By 2026, the low-rise segment is expected to have 14,000 new units from 37 projects. Large projects such as Vinhomes Co Loa or Vinhomes Wonder Park will provide new low-rise supply to the market.
