Hanoi, Saigon apartment supply lowest since 2014

By Dat Nguyen   July 4, 2019 | 05:38 pm PT
Hanoi, Saigon apartment supply lowest since 2014
Number of new apartment in Hanoi in Q2 was almost half of that in Q1. Photo by VnExpress/Nhat Quang.
A tightening of administrative procedures and bank credit dragged new apartment supply in the second quarter in Hanoi and Saigon to a five-year low.

Real estate consultancy Jones Lang LaSalle (JLL) said in a newly-released report that only 4,100 new apartments came into the Ho Chi Minh City market. It cited stricter regulations, which require developers to secure all necessary permits before beginning to sell, for the decline.

Executives from 100 real estate firms had met with city authorities in April to express disappointment that their requests and complaints had not been addressed for a long time and that sometimes it takes years to complete certain procedures.

The 2016-2020 housing development plan precludes approval for new high-rise apartment towers in inner city areas until 2020. JLL forecasts supply this year to fall to 18,000-28,000 units, much lower than in previous years, while demand remains high.

The low supply has sent prices rising. A square meter in HCMC costs an average of $2,009, up 21.6 percent from a year ago. High-end apartments cost $4,569, up 52.9 percent. In the mid-range, prices are $1,200-2,000 and demand is highest.

In Hanoi, only 5,900 apartments, or half the first-quarter number, came into the market, mostly at existing projects or, in the case of new projects, small with fewer than 500 units. But demand too fell, with only 4,660 units being sold, down 65.3 percent from the first quarter. Sales had risen by 65 percent in the previous quarter.

JLL said one of the reasons for the lower demand was the rising interest rates on mortgages as banks became more cautious about approving property loans.

It expected additional 10,000-15,000 units to come into the market during the rest of the year, mostly in the low- and mid-priced segments.

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