Apartment prices in Ho Chi Minh City escalated due to the pressure of skyrocketing construction material prices
The demand to buy mid-end apartments has increased sharply
According to the February 2022 market report of Batdongsan.com.vn, the number of apartment listings for sale tended to decrease compared to the previous month, but the demand for this segment increased sharply in the context of the market for apartments. face many challenges from rising inflation.
Specifically, in February 2022, the number of apartments for sale in the city was stationary compared to the previous month, but the demand for this segment increased by 22%. Particularly in the mid-end apartment segment, buying demand increased by more than 23% compared to the first month of the year and the strongest increase was in the type of apartments priced from 40-50 million VND/m2 in Binh Tan, Binh Chanh and Ho Chi Minh City areas. . Thu Duc.
According to data from DKRA Vietnam, in the first two months of 2022, Ho Chi Minh City and neighboring provinces have 10 new apartment projects for sale, providing 1,175 apartments. New supply is concentrated in HCMC, accounting for 58% of total supply and 57% of new consumption. The number of units sold in the whole market reached 845 units, an increase of 28%, the consumption rate reached nearly 80% on new products.
Notably, most of the mid-end projects newly launched in the market with high absorption rates are concentrated in the western districts of Ho Chi Minh City.
By area, the supply of apartments in the West area is inferior to the East – South area while the population is large and the demand for housing is high. In 2021, the supply of apartments in the West area only accounts for 17%, compared to 20% of the South area and 58% of the East area, which is quite modest.
But in terms of the proportion of mid-end projects, the West area is gradually dominating thanks to the appearance of many new projects implemented in 2022 and is the area that records the supply of mid-end apartments with prices below 50 million. /m2 is the most abundant in the city.
According to Nguyen Hoang, R&D Director of DKRA Vietnam, the fear of inflation has made a part of investors choose real estate as a haven asset, especially the apartment segment. Ho Chi Minh City is facing a shortage of apartment supply, especially mid-range apartments because the number of new products is mainly concentrated in the segment of Grade A apartments. Affordable Grade C apartments are still scarce. In the context that house prices in Ho Chi Minh City are escalating, the trend of buying apartments is concentrated in places where projects with a price range of less than 60 million VND/m2 are deployed, such as in the western districts of Ho Chi Minh City.
Price hikes
However, according to research, apartment prices in the West area are also on the rise due to the pressure of construction costs and urbanization of the area. Specifically, in Binh Tan district, a phase 1 project was opened for sale in 2019, with a selling price of 30 million/m2, ranging from 1.7 billion VND/two-bedroom apartment. Up to now, the price of secondary apartments in the project has increased by 30-40%. The price of apartments for sale in phase 2 is about 45-50 million/m2.
According to the investor, the reason for the high price of apartments sold, besides the product element offered for sale in the second phase, belongs to the line of high-class isolated apartments, which are cared for with design, utilities, and daily infrastructure services. The more complete it is, the cost of deployment and urbanization of the area also causes real estate prices to adjust.
Similarly, a project in District 12, the opening price in early 2020 is around 38-40 million/m2, currently the investor is offering a new block for 46-57 million/m2, an increase from 8 -17 million/m2 compared to before. Or as the project in District 7 also has a transaction price on the market of not less than 55 million / m2, an increase of 15% compared to previous projects in the same area.
Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn shared, once the land fund is scarce and the price of materials is increasing, the quality projects are not many in the market, so it is forecasted in 2 years even though Even having money is not easy to buy a spacious and valuable living space. At the financial range of about 2-3 billion VND, to find a spacious living space, currently only the West area has the supply to meet this requirement.
According to statistics of the Ho Chi Minh City Real Estate Association (HoREA), in 2021, out of a total of 14,443 houses, there are no longer affordable apartments (0%), on the contrary, there are 10,404 high-class and luxury houses, Super luxury accounted for 73.98%, the rest were mid-end housing, accounting for 26.02% in the HCMC market.
The structure of housing products (as above) is a clear manifestation of the situation of “supply-demand mismatch”, the real estate market develops unbalanced and unsustainable, due to the lack of affordable housing. and there are signs of oversupply of high-end housing.
HoREA said that, in addition to legal factors, the imbalance of supply – demand has caused the price level to be continuously pushed up.
“While the market is short of supply, businesses race to invest in the market segments that generate the highest profit margins. There are new projects that initially the investor intends to invest in the segment. affordable housing, with a price of about 30 million VND/m2, but it is the same project when the market lacks supply, the investor adjusts to raise the price to a very high price”, said Mr. Le Hoang Chau – Owner. HoREA president said.
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