Hanoi’s condo segment has experienced a free-fall in price in the primary market since the realty boom in 2007 according to an executive of CB Richard Elis Vietnam (CBRE). Around 53 per cent of newly-launched apartments in the first quarter were priced at below VND 21 million (US$1,008) per square metre at favorable locations like My Dinh, Dinh Cong, and Cau Giay urban area.
According to the Vietnam Net, prices of housing products in the secondary market have still continued on a downstream, at around 11 per cent y-o-y. The presence of a meager 1,100 flats as new products on the market this quarter proved that not only homebuyers but also enterprises and developers are sticking to a ‘wait and see’ attitude.
Several project owners are tending to prolong or even halt construction progress in spite of good business with other projects.
Savills Vietnam recorded the deepest plunge of the medium-cost apartment segment this quarter, at 9 per cent, compared to the last quarter in 2011. The fact showed that prices of all segments in the secondary market were falling in most districts on average. The leading property services provider attributed the price fall to low liquidity of the market since the middle of last year.
Data collected by Savills Vietnam in the first quarter indicated the consumption ratio of grade-B flats, or middle-priced products, stayed at 3 per cent, down nine percentage points from the previous quarter. Grade-A condos, or high-class apartments, saw transactions reach 2 per cent during the first three months. This showed that no change from the preceding three quarters had taken place.
The combined consumption ratio of the whole market stood at 7 per cent, sliding by five percentage points against the fourth quarter in 2011.
According to Savills Vietnam, the local market will see a new supply of roughly 45,000 flats from 52 projects in the next three years. This will put much greater pressure on the sluggish realty market, especially as the number of unsold housing products by Hanoi’s investors is fairly large, at about 16,500.
Due to financial constraints, the absence of speculators accounting for up to 60-70 per cent of the total demand was cited as the reason behind the weak liquidity of the market. Many specialists also agreed that an increasingly rising misconduct of developers and investors in terms of contraction progress and legal procedures, has also lowered confidence of buyers.
The ceiling deposite rate was revised down to 12 per cent a year but high lending rates plus concerns over dull outlooks and the maximum credit growth rate of 17 per cent annually at banks as required by the central bank have led to a poor appetite for property loans among lenders.
The lowered deposit rate cap is aimed at reviving the psychology of house buyers only since borrowers taking out bank loans are still charged with unaffordable lending rates.
Experts advise local firms to pay attention to the total area of every condo prices as well as quality and flexible payment to increase liquidity for the real estate market.