Interest rates remain high, forcing investors to "release goods" and liquidate apartments.
According to a report by Savills Vietnam, in the first quarter of 2023, the supply of apartments in Hanoi and Ho Chi Minh City continued to decline sharply. Specifically, in Ho Chi Minh City, the total supply of apartments in the quarter reached more than 1,600 units, down 25% compared to the same period last year. Meanwhile, in Hanoi, the total supply of apartments in the quarter reached more than 2,000 units, down 27% compared to the same period last year.
The secondary apartment market is bustling, as prices are much cheaper than new apartments. (Photo: VV)
In the Hanoi market alone, due to the decrease in the supply of new apartments, the selling price of this segment has continued to increase. In the period 2018 - 2022, the price of newly opened apartments increased by an average of 13% per year. Thus, in 4 years, the average apartment price increased by 52%.
In contrast to the primary market with a shortage of supply and increasing prices, in the secondary market (the resale market), apartments that have been through at least one owner are having attractive prices, 48% lower than new apartments in the same project. This has promoted the secondary market to be more active.
Ms. Nguyen Hong Dung, Senior Manager of Savills HCMC Residential Business Services, said: Secondary supply in the market also tends to increase slightly due to a group of individual investors having difficulty balancing cash flow in the context of rising interest rates.
“Individual investors who buy apartments and use financial leverage are under pressure as bank interest rates soar, forcing them to consider selling their investment portfolios. This has helped the supply of secondary apartments in major cities increase slightly recently,” said Ms. Dung.
Will secondary apartment prices increase?
Mr. Troy Griffiths, Deputy Managing Director of Savills Vietnam, assessed that the current apartment market has a special feature in that there is almost no primary supply, which means there is no new housing supply for home buyers with real housing needs.
“This forces them to seek supply from the secondary market. Since the beginning of the year, the secondary apartment market has been heating up in both Ho Chi Minh City and Hanoi,” the Savills expert emphasized.
Savills experts believe that there is currently a “wave” of secondary price increases across Ho Chi Minh City, up to more than 5%, especially in districts such as Tan Binh and District 11. Only secondary apartment prices in the remaining 9 districts tend to decrease.
Savills experts believe that there is currently a “wave” of secondary price increases across Ho Chi Minh City. (Photo: MP)
Mr. Troy Griffiths also pointed out a notable point about the secondary market, which is the solid legal factor of the products. Most of the projects have been granted certificates of right to use. Meanwhile, in the primary market, we see quite a few projects facing obstacles around this issue.
However, according to Savills experts, on the other hand, the secondary market also depends a lot on interest rate adjustments in the coming time.
“With bank loan interest rates reaching 14-15%, this is quite a high level that forces home buyers to consider carefully. However, if interest rates can return to the pre-COVID-19 period of around 10-12%, this market will start to become more attractive and increase liquidity,” the analyst said.
Mr. Troy predicts that the secondary market will be very interesting in the next 12 months. After this period, the situation of limited new supply will change thanks to more new projects being launched. At that time, secondary prices will likely return to a more stable state.
According to Savills Research Department, in Ho Chi Minh City from now until the end of the year, it is expected that there will be 9,000 new apartments, of which class B will account for 71%, class C will have 23% market share and class A will have 6% market share.
By 2026, 137,540 units from 186 projects will be launched. Although some projects have not been ranked, investors are showing interest in affordable products to meet demand.
For Hanoi, in 2023, 9,400 apartments will be handed over and 7,000 new apartments are expected to be launched for sale, with Class B supply accounting for 83%. From 2024 onwards, the market is expected to have about 86,500 new apartments from 98 projects, of which Class B accounts for the majority with 60% market share.
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