New apartment prices in Ho Chi Minh City are in the opposite direction of Hanoi

A recent market report by CBRE (a company specializing in providing real estate consulting and investment management services) shows that the average price of apartments in Ho Chi Minh City has not changed much compared to last year.

The average price of new apartments here is about 61 million VND per square meter, down 3% as of the end of the first quarter. The price level has not adjusted much compared to the previous opening period, so the absorption rate of new apartment projects reached 80% in the first quarter of the year.

Data from real estate consultancy JLL also shows that by the end of March, primary prices in the high-end segment in Ho Chi Minh City were on a downward trend, down 1.3%. In the secondary market, prices of old apartments were recorded by JLL to have slightly decreased quarter-on-quarter.

In contrast to the situation in Ho Chi Minh City, Hanoi apartments have increased rapidly in the first three months of the year. CBRE said that the selling price of new apartments in Hanoi increased by 19%, reaching an average of VND56 million per square meter, excluding VAT and maintenance fees.

The reason for the contrasting housing prices in the two largest cities in the country, according to Ms. Nguyen Hoai An, an expert from CBRE, is that Ho Chi Minh City apartments have passed the period of hot development and are now entering a period of stable selling prices.

The supply of high-end to luxury apartments in this market is still quite large, investors must offer attractive payment policies, even high discounts, to increase competition for new projects.

For example, most investors launching projects at this time in Ho Chi Minh City are offering big incentives to stimulate demand. The most common is a two-year payment policy with a principal and interest grace period.

A project in the Eastern region applies preferential mortgage interest rates for 15 years, which is considered "the first time". Buyers only need to put up 30% of the house value, the rest can be paid in installments from the bank for 15 years, with a fixed interest rate of 6% per year.

In order to "push" sales, many projects even apply a discount of up to 24% when buyers pay the full value of the house.

In addition, Ms. An added, on average, each project when launched often attracts more investment buyers than home buyers. Many investors are using financial leverage, so indirect discount policies will increase the appeal to this group of potential customers.

However, data from research unit Savills shows that the majority of sales in the first quarter in Ho Chi Minh City were in the Class C housing segment, accounting for over 60% of the market share; Class B was 37%.

Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan channel, acknowledged that the contrasting developments between the two markets have prompted a group of customers in the South to pay more attention to apartments in Hanoi, because of the lower prices.

Data from this channel shows that the number of users from Ho Chi Minh City interested in apartments in Hanoi has increased 7.5 times since the beginning of 2021. Meanwhile, the number of searches for apartments by people in Ho Chi Minh City is only twice as high.

This year, about 8,000 new apartments are expected to be launched in Ho Chi Minh City, with prices increasing by about 3%, less than apartments in Hanoi. This will help narrow the price gap between the two markets.