HCMC apartment prices drop 20%

Anh Tuan is selling a 78-square-meter apartment at the 4S Linh Trung building in HCMC’s Thu Duc City for VND28 million (US$1,116.2) per sq.m., down 15% from the beginning of the year.

He said many apartments similar to his are selling for even lower at VND26-27 million per sq.m., which is around the price the apartments were purchased at in 2018.

According to owners of these apartments, the prices are down because the building has been under construction for 8-10 years, yet title deeds have not been issued.

Xuan, owner of a 76-square-meter apartment for sale in District 7, claims the price of her property has decreased by nearly VND300 million, almost down to its original purchase price in 2021.

"On trading forums, I have seen many apartments in the same building priced at just VND38-42 million per sq.m," she sighs. "If they truly intend to sell at that price, it would be a massive loss for me as the building was handed over two years ago, with all legal paperwork completed."

Average apartment prices have also fallen because of oversupply.

Apartments in the Opal Boulevard building go for VND33-36 million per sq.m. on the secondary market, 14% lower than the previous year.

The nearby Centum Wealth and Urban Green buildings have also seen their average prices reduced by 12% and 6.8%, respectively, from the same period last year.

A new VnExpress survey showed that price cuts have gradually slowed down to 10-12% towards year-end, compared to more drastic cuts earlier in the year of 20-30%, which also dragged down the average apartment price.

According to 2022 statistics from real estate consultancy Batdongsan, average apartment prices had already sunk in many areas of HCMC.

In Tan Phu District, the average apartment price is now around VND39 million, down 20% from 2022.

Similarly, prices are down 16.5% from 2022 in Thu Duc and down 14.6% from 2021 in Binh Tan.

Apartments closer to the center of the city fare better, with average prices decreasing by only 3.2-6% from last year in some districts, like Binh Thanh and District 2, and even increasing in some others, like Binh Chanh by 5.8% and District 7 by 3.2%.

A Batdongsan spokesperson said prices on both the primary and secondary markets were used to calculate the average figure.

The primary market has fluctuated much less from year to date, so the price cuts mostly resulted from changes on the secondary market.

A report from real estate agency CBRE Vietnam stated that apartment prices in HCMC have dipped 4-6% on the secondary market during the first three quarters of 2023, while they sank 4.6% on the primary market in Q2.

Statistics from the Ministry of Construction indicate that in Q3 prices increased on the primary market year-on-year but decreased by 2-3% from the previous quarter.

Duong Thuy Dung, COO of CBRE Vietnam, said higher loan interest rates in early 2023 put pressure on property investors to "sell at all costs."

Since interests are much lower now, investors are not willing to slash prices as much, she said.

Nonetheless, apartments on the secondary market face competition from the primary market as sellers there may indirectly drop their prices through discounts and promotions that gradually increase towards year-end.

Aside from promotions, some sellers on the primary market allow low monthly payments of VND2-6 million, and up to 2-3 years of debt extension.

Meanwhile, buying on the secondary market requires paying a large sum of money all at once, which usually forces buyers to obtain a loan at less favorable interest rates.

According to Dung, apartment prices will not decline significantly until early 2024, but they also will not climb back to their prime rates experienced in 2021-2022 either.

"The market may begin to recover in late 2024, starting from in-demand sectors with high liquidity, like social housing and affordable apartments. Similarly, properties on the secondary market need to be affordable to attract customers," she said.