The Southern Real Estate Market: Where is the Money Going?

9 December, 2024

According to data from Batdongsan.com.vn, the level of interest in real estate sales and rentals in 2024 has recovered compared to 2023 and surged in the middle of the year. A survey of brokers on Batdongsan.com.vn showed that transactions have improved, with 35-40% of respondents believing that real estate transactions remain stable this year.

At the Vietnam Real Estate Conference – VRES 2024 held in Ho Chi Minh City on December 5, Mr. Dinh Minh Tuan, Southern Regional Director of Batdongsan.com.vn, said that the Vietnamese real estate market in 2024 is clearly divided between segments and can be categorized into three pictures: North – South, high-rise – low-rise, and center – outskirts.

The market from 2021 to 2024 recorded an 80% increase in price levels, an average of 20% per year. However, when looking at the Northern and Southern markets, there is a clear differentiation, especially in the two major cities of Hanoi and Ho Chi Minh City. The average asking price of real estate in Hanoi has increased significantly in most segments.

Specifically, in November 2024, the selling price of apartments in Hanoi reached 61 million VND/m2, surpassing Ho Chi Minh City (55 million VND/m2), according to Batdongsan.com.vn. For detached houses, the selling price in Hanoi reached 197 million VND/m2, up 58% compared to January 2023. In contrast, the average asking price of detached houses in Ho Chi Minh City was 108 million VND/m2, a 10% decrease from January 2023.

The average asking price of land in Hanoi in November 2024 was 70 million VND/m2, while in Ho Chi Minh City, it was 57 million VND/m2. Despite most new supply having high asking prices, absorption in Hanoi remains quite favorable.

The average asking price in Hanoi continues to rise in most segments, surpassing Ho Chi Minh City

The level of interest tends to increase for the Southern real estate market

Apartments in Hanoi have grown steadily from year to Q3/2024, and entering Q4, the market cooled down very quickly. This is due to the developments related to land auction issues, which led to a 75% increase in the market price compared to the beginning of the year, and a 58% increase in apartments. In contrast, the Ho Chi Minh City market in 2023 saw almost no price increases in any real estate sector. Moving into 2024, apartments and detached houses rebounded, but the highest figure was only 17%, while other segments remained almost unchanged.

Mr. Tuan believes that there are signs of money flow seeking opportunities to “flow” south after focusing mainly on Hanoi. According to Batdongsan.com.vn data, the number of people from Hanoi searching for real estate in Ho Chi Minh City in November 2024 increased by 7% compared to January 2024. Conversely, the number of people in Ho Chi Minh City searching for real estate in Hanoi decreased by 12% during the same period. A survey by Batdongsan.com.vn found that 66% of Hanoi respondents were interested in the Southern market.

Although the potential of the Southern market is highly regarded, Mr. Tuan believes that legal issues remain a significant obstacle, and investors and buyers need to consider this carefully.

Next, in the high-rise – low-rise differentiation picture, apartments are the type of property that leads the way in the market’s recovery cycles, performing well in terms of interest and price (reaching 45%, higher than other types, including detached houses at 36%, land and villas at 26%, and shophouses at 10%) in Q4/2024 compared to Q1/2022.

The most significant growth driver for apartments comes from real housing needs and their appeal to young people, with 73% of respondents believing that this is the type of property that young people (under 35) are most interested in 2024. The proportion of those wanting to buy apartments is very high among singles and families with children under one year old.

Mr. Tuan also mentioned the supply-demand mismatch. In the group of apartments, 56% of respondents wanted to buy apartments below 2 billion VND, but the ratio of products at this price in the supply was only about 17%, and it had to be traded off for location, utilities, or the age of the apartment building. Similarly, with land and houses, most people want to buy houses below 5 billion VND, but the current supply of detached houses, according to Batdongsan.com.vn’s sample, is only 17% at this price. For land, 21% of buyers are looking for properties below 2 billion VND, and the supply on the page is 27%. However, this type of land is not expected to recover immediately this year.

On the other hand, low-rise real estate products have a high value and are not yet highly regarded in terms of financial support. In addition, the rental income from low-rise real estate is gradually being affected by the trend of consumers’ increasing spending on e-commerce.

A report from the e-commerce data platform Metric shows that 32% of Vietnamese consumers now shop online several times a week, and on average, Vietnamese spend up to 1 billion USD on this form of shopping per month, and the yield has just returned to the level of early 2021.

In the differentiation picture of center – outskirts, central cities and areas still have better growth in interest and selling prices in this period, thanks to meeting the needs of consumers for connectivity and employment.

The new metro lines have also contributed to changing the urban infrastructure of the center, creating good growth momentum. Mr. Tuan believes that apartments will be the most beneficial type and may be the segment with the fastest-growing price.

Data from Batdongsan.com.vn shows that many wards through which the 2A Cat Linh – Ha Dong metro line passes have recorded increases in the asking price of apartments. For example, Quang Trung ward has seen an average apartment asking price increase of up to 70%, while this rate is 63% in La Khe ward.

On the other hand, according to a survey of brokers in Q4/2023 by Batdongsan.com.vn, 46% of respondents were concerned about the progress of community formation, 43% were concerned about project infrastructure, and 43% were concerned about the location being too far from the outlying areas.