Vietnam real estate prices spike in May with housing in short supply

By Ngoc Tuyen   June 24, 2016 | 02:18 pm GMT+7

The prices of apartments, villas and townhouses rose in May due to a shortage of new housing supply, causing sales to fall.

In Ho Chi Minh City, secondary prices on the real estate market increased 10 to 15 percent and housing transactions fell 18 percent in May, compared to the same period last year, according to the latest report issued by Vietnam National Real Estate Association (VNREA).

The southern hub's primary housing prices accelerated five to seven percent compared to January this year, while transactions reached only 6,400 units for properties worth from VND2 billion to VND4 billion ($90,00-$180,000), a drop of about 30 percent compared to the same period last year.

vietnam-real-estate-prices-spike-in-may-with-housing-in-short-supply

Housing prices are on the rise in Vietnam after relative calm since the start of the year. Photo from bitexcofinancialtower.com

In the capital Hanoi, purchasing power climbed slightly from last month after a series of mid-range developments were launched. The VNREA evaluated that the “transaction volume in Hanoi’s housing market is positive as deposit interest rates have been cut and the borrowing interest rate could be scaled down in the near future.”

The VNREA report shows that despite progress in the capital, there was a serious shortage of new housing developments across the country, and most new 'launches' were simply price adjustments or new sale policies on existing properties. This has caused house prices in Vietnam to spike.

The association underscored that the majority of current housing project fall into the moderate price frame (about under VND1 billion - $45,000) to meet the demand of middle income buyers. 

“After the altercation between banks and investors on housing project in Ho Chi Minh City, property buyers become more prudential and choosy about new projects” the report said.

Regarding land and street-front housing, the price bracket has remained relatively steady, but with demand going up, especially in District 9 and District 2 in Ho Chi Minh City, prices are accelerating.

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