Impacted by increasing supply sources, the apartments for sale segment in both Hanoi and Ho Chi Minh City saw a downturn in the first half of this year.
The Ho Chi Minh City market welcomed an additional 6,109 condominium units in the first half, a decrease of 36 per cent year-on-year.
The mid-end segment witnessed the biggest decrease in new launches in the second quarter, with a fall of 62 per cent quarter-on-quarter and 52 per cent year-on-year.
The reason for this downturn, according to Thanh Pham, senior manager of CBRE Vietnam, was the impact of the fire at the end of March which has put a strong focus on safety in condominium projects and made the process of obtaining the relevant safety certificates more stringent.
This incident also made many buyers hesitant to buy units in high-rise buildings, driving down sales volumes.
Besides, the government has also limited bank credit going into real estate in order to prevent the market from overheating. As a result, developers are expected to look for other sources of funding besides bank loans.
According to Nguyen Van Thanh, director from NVTland Real Estate Floor in Ho Chi Minh City, buyers are truly worried about fire safety and many are still biding their time considering their options.
Thanh, however, also confirmed that these concerns are short-term only. “On one side, buyers are now more careful in choosing projects and on the other side, developers are also upgrading their fire safety systems,” Thanh said.
Meanwhile, Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, also said that demand is huge and projects which are qualified enough still remain on the radars of buyers.
In Hanoi, in the second quarter of 2018, there were 6,534 units launched in 19 projects, down 20 per cent year-on-year. New launches in this quarter are mostly located in the west and north of the city accounting for 53 and 25 per cent of all newly launched units.
In terms of sales performance, 5,900 units were sold during the first half of 2018, down 22 per cent year-on-year. This time of the year is when developers usually review their products and prepare to launch new products at the end of the year. Slowing down launching speed also allows the market to absorb unsold units.
In terms of pricing, the average selling price from developers in the first half of 2018 was recorded at $1,332 per square metre, down 0.4 per cent quarter-on-quarter, but up 0.4 per cent year-on-year.
In 2018, CBRE forecasts that there will be 32,000 units launched in Hanoi—a decrease of 10 per cent year-on-year. The decrease in launched supply allows inventories to absorb, which is a positive signal for the market.