HCMC new apartment market prices itself out of buyers’ reach

Lien, who works for a book publisher in District 3, has been searching in vain for a new 65-square-meter apartment costing around VND46.2 million (US$1,880) per square meter in the city’s south.

Forced to turn to the secondary market, she found only three listings meeting her criteria.

One costs over VND90 million per square meter and the others are priced at around VND55 million but located on the city’s outskirts in Nha Be and Binh Chanh districts.

Quoc Quang’s family of five too have been unable to find any new apartment that suits their needs and budget.

They are looking for a unit costing less than VND3.5 billion and located within 12 kilometers of the city center, but of the six properties a broker recently told them about, four face legal issues and the rest are either too small or too costly.

"It has never been this hard to find a new apartment in HCMC," Quang says. "Dozens of new projects used to be launched every year in the past, but there have only been three or four this year and their prices are high."

Many homebuyers favor new projects because there are often discounts, promotions and favorable payment policies.

But the primary market only accounted for 55% of apartment purchases in the second quarter of this year, down from 68% in the first.

The shift to buying second-hand apartments is "hardly surprising" given the prolonged lack of new supply, it said.

Few new projects have managed to get approvals in the last three years, and the plunging supply has driven up prices and left buyers with limited options.

A report by property consultancy CBRE Vietnam said around 1,700 new apartments were offered for sale in the city in the first six months, half the figure seen in previous years and a mere 10th of the supply in pre-Covid years.

Some 80% of these are premium units priced at VND60 million per square meter or higher.

Vo Hong Thang, director of investment at real estate agency DKRA Group, said older apartments priced at VND3 billion or less have been changing hands recently.

The units are typically located in suburban districts or are more than 10 years old, he added.

But the rising demand in the secondary market has pushed up prices there as well, especially at properties close to downtown.

CBRE Vietnam, another property consultancy, said secondary market prices rose by 3% year-on-year in the second quarter.

Even in places not close to the city center, where many property owners used to make fire sales, prices are 2-3% up.

Le Hoang Chau, chairman of the HCMC Real Estate Association, said 148 projects in the city face legal hurdles. Supply could improve later this year if these issues are resolved, he said.

Duong Thuy Dung, executive director of CBRE Vietnam, expected supply constraints to last well into the first half of 2025.

"Given the shortage of supply and high housing demand, apartment prices in HCMC are likely to increase further."