May 27, 2021

Real Estate Prices In The Primary Market Increases By Almost 15 Percent In One Year

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Ho Chi Minh City - Currently, apartment prices in the primary market are higher than last year’s quarter by 14,6%, but selling prices in the secondary market have decreased or stayed the same.


According to CBRE Vietnam, in the first few months of 2021, prices of apartments belonging to new projects in all segments have increased, reaching 2.219 USD ( around 51 million VND) per square meter, around 14,6% higher than last year. The cause of the increased prices in the first quarter is due to the new projects being located near the city center. Additionally, newer projects offer newer materials, better quality and more conveniences.


This upward trend of prices shows no signs of stopping. According to CBRE, the average apartment price in the primary market will continue to climb. Apartment prices in 2021 in all segments (luxury, high-end, mid-end and low-end) will increase by 1-4% compared to 2020. However, costs of luxury apartments will rise by 2-7% during 2021-2022 due to the appearance of new luxurious projects called branded residences in District 1.



The average primary price of apartments in Ho Chi Minh City by quarter 


Apartment demands come from domestic buyers. As for international customers, while they are waiting for international flights to reopen, investors are starting to sell and rent out luxury and ultra-luxury apartments in targeted markets like Taiwan, Hong Kong, etc.


Forecasts from DKRA Vietnam also agree that housing prices of Ho Chi Minh city in 2021 will have an upward trend as a result of the constant appearance of expensive apartments (luxury and ultra-luxury). Some luxury projects that will be sold in the near future can reach over 20.000 USD per m2. One of the main contributing factors to the inflated price is that these new apartments will concentrate in the center of District 1, Ho Chi Minh city, contributing to push up the average house price in this city. 


As Collier Vietnam recognized, the hot spot of the market concentrated in the East. Since Thu Duc city was established, the selling price of apartments has increased by an average of 7-9% compared to last year and raised by 45% compared to 2018.


See more: Vietnam's economic and real estate market information in previous years

 The apartment market in district 2, Thu Duc City

Meanwhile, the survey by Savills Vietnam shows different points. Those are the next stages of sale opening of existing apartment projects, which recorded an increase of up to 6% compared to the price of previous sale openings. The reason is that the impact of Covid-19 and legal problems caused limited supply and the average house price in the whole market increased every year due to the appearance of high-end and luxury projects.


However, the reports of escalating house prices by surveying units only reflect the primary market, investors offer the first time to the market and ignore the developments of the secondary market. According to a survey of VnExpress, in the last two quarters of 2020 and the first month of 2021, the selling price of apartments of 2021 on the secondary market still appeared quite common in the case of selling at purchase price (previous buyers accepted the losses of expenses for finance). 


In some cases, property owners accept a 2-3% discount due to capital constraints, even large apartments have a higher reduction because the total value of the property is large and more picky. The discount secondary transactions take place locally, although they are not representative of the market, but the common point is that new products are often difficult to sell quickly because the project is still under construction or has not been handed over yet. The situation of secondary house prices falling while primary house prices have continued to escalate throughout the past 9 months.


The secondary market of apartments

According to Tran Khanh Quang - general director of Viet An Hoa Company, the rapid increase in house prices in Ho Chi Minh City in the primary market despite the impact of Covid-19 shows that the main factor driving the current house price level depends a lot on seller (enterprise).


From the initial offering that is above the regional price level, the subsequent sale that is higher than the previous one to luxury home products priced at the top of the market, it all depends on the one-way pricing strategy of investors.


Meanwhile, the objective factor should be considered that the selling price on the secondary market (investors, swing trading customers) has not been recognized fairly. “Compared to the primary market with only price offered by the investor, the secondary market often has more prices and reflects more substance based on demand for use, exploitation and investment”, he said. 


Real Estate Prices In The Primary Market Increases By Almost 15 Percent In One Year

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