Record low supply, skyrocketing prices
Reports from market research units in the third quarter of 2023 all show that the supply of villas and townhouses is at a record low, leading to a continuous increase in selling prices. Specifically, according to Savills' report, the villa and townhouse segment in Hanoi in the third quarter recorded a new supply decrease of 76% quarter-on-quarter and 94% year-on-year. Primary supply decreased by 9% quarter-on-quarter and 39% year-on-year, with townhouses dominating.
Considering the entire market, the total supply in the first 9 months of 2023 is only 1/20 compared to 2019. Although the supply is small, it is mainly concentrated in districts far from the center such as Gia Lam, even a large amount of supply comes from Hung Yen, which was previously a suburban market that was little noticed.
Sharing the same view with Savills, Senior Director of CBRE Vietnam Hanoi branch, Nguyen Hoai An also affirmed that the supply of villas and townhouses in Hanoi is at its lowest level in many years. In the third quarter of 2023, the Hanoi market recorded 710 newly opened units from 5 projects, concentrated in the North and Hung Yen. Compared to the second quarter of 2023, the number of units opened for sale in the third quarter increased nearly 5 times. However, in the first 9 months of 2023, the total new supply decreased by 81% (compared to the same period in 2020 and 2021) when more than 2,100 units were recorded.
The decline in supply is one of the strongest factors pushing up the price of villas and townhouses in Hanoi. According to Ms. Do Thu Hang, Senior Director, Savills Hanoi Research and Consulting Department, the current average value of villas and townhouses in Hanoi is around VND200 million/m2. A few years ago, this price was only recorded in central districts.
Actual surveys show that large projects around Hanoi have had good price growth rates in recent years. From an average price of 100 million VND/m2 in 2018, the current price of the low-rise segment in the East of Hanoi is 214 million VND/m2, in the West of Hanoi is 226 million VND/m2, in the North is 244 million VND/m2 and in the South is 186 million VND/m2.
Assessing the year-end market outlook, Ms. Hang said that by the end of 2023, the supply is expected to have 695 more villas and townhouses from 7 projects. Tay Ho District will account for the largest market share with 24%, followed by Long Bien with 21% and Gia Lam with 20% market share. The West continues to witness a shortage of future supply.
Liquidity prospects from West Hanoi
The Hanoi housing market has begun to have more positive changes in the third quarter of 2023 thanks to factors such as lower interest rates and flexible sales policies from investors. CBRE's report shows that although supply is low, market demand is still high. Accordingly, the number of units sold in the third quarter of 2023 continued to exceed new supply, reaching 910 units and increasing by 51% compared to the second quarter. The total number of units sold in the first 9 months of 2023 was recorded at 2,580 units, exceeding the total new supply launched in the period.
Many experts believe that the amount of new supply, although still limited, is expected to improve in the fourth quarter of 2023 and is likely to record good liquidity in areas with strengths in infrastructure, existing utilities, and flexible traffic connections.
Accordingly, the Western region is having strong movements in infrastructure and synchronous transportation, creating a new look for the urban picture. First of all, many ministries, branches and enterprises are moving to this area, creating an area where thousands of large and small domestic and foreign enterprises are concentrated, leading to a wave of people moving here to buy houses and live.
Large-scale projects developed along these routes in the West include: The Manor Central Park, Vinhomes Green Bay, Vinhomes Thang Long, Mailand Ha Noi City, Solasta Mansion... According to actual surveys, the price level at these projects is constantly increasing. It can be mentioned that Vinhomes Green Bay urban area has a price of about 400 million VND/m2, The Manor Central Park is about 320 million VND/m2. Further to the West, Park City villas also reach the threshold of 300 million VND/m2.
In this area, the development of routes such as To Huu - Le Van Luong, Ring Road 2, Ring Road 3 and the planned Ring Road 3.5 and Ring Road 4, or Thang Long Avenue along with urban railway projects No. 2A and No. 3 have created momentum for the development of real estate projects.
In particular, the Ring Road 4 under construction is expected to promote development in suburban areas (Me Linh, Dan Phuong, Hoai Duc, Soc Son, Ha Dong, Thanh Oai, Thanh Tri) and neighboring provinces such as Hung Yen and Bac Ninh. When Ring Road 4 opens to traffic in 2027, it will shorten travel time from Hanoi to other localities, and the housing supply in these areas is forecast to increase by 36% compared to present, contributing to reducing pressure on the inner city area with increasingly limited land funds. This factor also brings a strong attraction for real estate demand from neighboring provinces of the capital.
In the context of continued scarcity of supply, high land prices, as well as the more positive psychology of home buyers at the end of the year, villas and townhouses in the West of Hanoi are predicted by many experts to continue to increase in temperature, contributing to promoting strong real estate development in this area in the coming time.
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