The mid-end and affordable segments continue to have a high percentage of buyers who buy to live.
Condominium market
Performance
The primary price of condominiums continued to increase, although only incrementally. The high-end and luxury segments recorded the largest increases – 7.5% and 10%, respectively. The mid-end and affordable segments increased in primary price by a small amount.
On the Hanoi’s primary market, prices have gained slightly, but remained relatively stable in general.
Supply
The condominium market in HCMC continued to move slowly in 1Q2019. The mid-end segment remained the most sought-after with more than 1,500 units transacted, followed by the high-end segment with almost 1,000 sold units. The luxury and affordable segments combined accounted for less than 25% of the recorded transactions in 1Q2019.
The mid-end segment, in particular, accounted for approximately half of the total new condominium supply in Hanoi, and in terms of location, the market is being expanded and moving further and further outwards to areas with more greenery and recently finished infrastructure.
Demand
With land prices in HCMC increasingly out of reach for the majority of the public, the general public is becoming more receptive to condominiums. Young families, in particular, are attracted to condominiums due to their relative affordability compared to landed houses. Furthermore, with the continuing progress of the metro line in HCMC, more development projects are being brought up in non-CBD and suburban areas, with Vinhomes Grand Park in district 9 leading the pack.
Due to a market-wide upward adjustment in price which occurred towards the end of 2018, the cost of housing in Hanoi has risen, particularly in the luxury and high-end segments; buyers in these segment do not often buy to live, but buy to sell or buy to let. On the other hand, the mid-end and affordable segments continue to have a high percentage of buyers who buy to live, and the affordable segment, in particular, have always recorded a much higher percentage of end-users than the other segments.
Outlook
Although 1Q2019 was a quiet period for the condominium market in HCMC, the market is expected to pick up pace in the second quarter of the year when more mid-end and affordable developments are opened for sale.
The mid-end and affordable segments have begun to gain prominence in Hanoi, which shows that the market is slowly shifting its focus towards affordability in 1Q2019.
New supply is mostly located further away from the central areas of HCMC.
Landed properties market
Performance
Prices of ready-built landed properties have skyrocketed, influenced in part by the attractiveness of shophouses, which have attracted great interest from buyers who are looking for alternative channels of investment. The average sales price of shophouses in 1Q2019 has increased by more than 50% over that of 4Q2018. The average asking sales price of villas and townhouses increased by 33% and 35% over 4Q2018, respectively.
As opposed to the situation in HCMC, the landed property market in Ha Noi has enjoyed a positive 1Q2019. In Hanoi, landed properties are still much more preferred than condominiums, and they are traditionally considered among the best investment channels due to their potential to deliver long-term capital gains. Although condominiums have gained its popularity in recent years, landed properties are still the preferred choice of accommodation.
Supply and Demand
Vinhomes Grand Park (formerly known as Vincity Grand Park) was the main source of new landed properties for HCMC in 1Q2019. Furthermore, as the average land price in HCMC is becoming increasingly out of reach of the general public, developers are moving outwards to fringe areas of the city. The announcement of Nam Long Group’s acquisition of Keppel Land’s 192-ha Waterfront City development in Dong Nai signaled the start of this movement. With regards to location, districts 2, 7, and 9 contain the majority of landed properties in HCMC.
Buyers of landed properties in Hanoi can be assigned to one of two groups. While investors prefer products from new launches to take advantage of the good initial pricing, end-users would seek established projects with good construction progress and supporting facilities. Absorption rates will be positive on the back of improved buyers’ sentiment and effective marketing campaigns from new launches.
Outlook
Within 2019, the market is expected to receive an additional 05 landed developments totaling almost 1,000 units. These developments are all located further away from the central areas of HCMC.
The landed properties market in Hanoi is expected to welcome an additional 2,000 units by the end of 2019. The primary sale price will continue to rise in the midst of solid demand from both end-users and investors.
