Villas and townhouses in Hanoi are unsold but prices are still high

Lowest opening volume in the past 10 years

In terms of total new housing supply and demand in 2023, CBRE's figures are showing not-so-positive signals, especially at the beginning of the year. However, both Hanoi and Ho Chi Minh City have the lowest amount of new launches in the past 10 years.

The unit's recent market report shows that the housing market in Hanoi and Ho Chi Minh City both recorded the lowest total supply of new launches in 2023 in the past ten years.

Specifically, in Hanoi, a total of nearly 10,300 new apartments and 2,600 low-rise houses were newly launched for sale this year, down 32% and 84% respectively compared to 2022. Meanwhile, Ho Chi Minh City recorded a more modest supply with more than 8,700 apartments and only nearly 30 new low-rise houses, down 54% and 98% respectively compared to 2022.

Biệt thự, nhà liền kề Hà Nội ế nhưng giá vẫn cao - 1 — Townhouses cost hundreds of millions of dong per square meter in Hanoi (Illustration: Ha Phong).

Regarding absorption rates, the Hanoi and Ho Chi Minh City markets recorded more than 22,000 sold houses (including high-rise and low-rise) in 2023, only approximately half of the number sold in 2022.

Similarly, a recent Savills market report showed that Hanoi's villa and townhouse transactions in 2023 recorded only 359 units sold - the lowest number since 2014. In addition, the total number of transactions decreased by 76% year-on-year and the absorption rate also decreased by 31% year-on-year. In the fourth quarter of 2023 alone, only 64 units were traded, down 67% year-on-year.

Notably, despite sluggish sales, new prices for townhouses in Hanoi continued to increase. The strongest increase was in primary villas, up 55% quarter-on-quarter to VND160 million/m2. In addition, townhouse and shophouse prices also increased by 3% quarter-on-quarter, reaching VND194 million/m2 and VND328 million/m2, respectively.

Previously, the Ministry of Construction also stated that the selling price of villas and townhouses in Hanoi remained high despite low transaction volume. This segment recorded selling prices of more than VND100 million/m2, with some projects even reaching over VND300 million/m2, mainly concentrated in the western part of Hanoi. Or in Ho Chi Minh City, the selling price of villas and townhouses in some areas fluctuated from VND140-400 million/m2.

High prices have created a major barrier to buyers.

Ms. Do Thu Hang, Senior Director, Research and Consulting, Savills Hanoi, said that in 2023, the number of villa and townhouse transactions in Hanoi was the lowest in nearly 10 years. The reason was the low supply on the market, leading to a low number of units traded.

According to Ms. Hang, the primary supply reached more than 700 units from 16 projects, down 23% year-on-year, of which townhouses accounted for the majority of the market share with 44%. If we only count new projects, the whole year of 2023 recorded only more than 270 units, down 82% year-on-year and down to the lowest level in 10 years. In particular, the number of new projects from Ring Road 3.5 onwards is also increasingly small.

In addition, the high cost of inventory also causes most investors to not change prices, and even continue to increase the selling price of new baskets.

"Investors bear huge construction investment costs and usage fees, which directly affect the output price of the product. In addition, investors are also very cautious in 2023, prioritizing legal procedures or construction progress rather than bustling pre-sale activities like in the previous period," Ms. Hang added.

Biệt thự, nhà liền kề Hà Nội ế nhưng giá vẫn cao - 2 — Rows of townhouses at a project in Hoang Mai district, Hanoi are abandoned (Illustration photo: Ha Phong).

According to Ms. Hang, high selling prices have created a big barrier for low-rise home buyers. Many investors are hesitant to offer prices lower than expected, so buyers have to pay a rather high opening price.

Commenting on the recent villa and townhouse market, Mr. Matthew Powell, Director of Savills Hanoi, said that limited new supply, high-priced inventory and low homebuyer confidence have affected the performance of the low-rise housing market.

However, according to this expert, future infrastructure development will continue to promote housing demand to neighboring provinces and areas with more reasonable prices and large land funds.

Source