Hanoi's villa, townhouse sales plunge 40% in Q2

The absorption rate for new units was 48%, down 15 points quarter-on-quarter and 3 points from a year ago, it said in a recent report. Over 600 were added to the market at 16 projects, down 9% from the first quarter and 24% year-on-year.

Almost two-thirds of them were located in Ha Dong District, where transactions are increasing as some infrastructure projects are expected to be completed this year, it said.

Do Thu Hang, senior director of research and consulting at Savills Hanoi, said the villa and townhouse market is tepid due to high prices.

Primary market prices increased by 9% from the first quarter to VND178 million (US$7,085) per square meter; shophouse prices rose 3% to VND288 million.

Demand was higher in nearby provinces since they offered competitive prices, Hang said.

Duong Thuy Dung, executive director of CBRE Vietnam, another property consultancy, said primary market prices were up because developers hiked prices of new units at several existing projects.

Analysts expected the amendments to the Land Law, Housing Law and Real Estate Trading Law to improve recovery prospects for the segment.

Dung said they would boost buyers’ confidence in the market and address legal hurdles.

Concurring, Hang said buyers’ rights would be better protected, pointing to a new regulation that only allows developers to collect a deposit of 5% of the property value as an example.

This reduces the risk of buyers’ money getting tied up in delayed projects and gives them more time to arrange finances, she said.

New townhouses and villas are expected to soon shift to suburbs due to the dwindling land supply in the city.

Savills said nearly 3,000 units at 13 projects would be launched this year, mostly in Dong Anh, Ha Dong and Hoai Duc districts.

"Hanoi must invest in developing infrastructure to alleviate pressure on its inner areas and facilitate the expansion of residential areas to the outskirts as people are becoming more open to moving to these places."