VietNamNet Bridge - The balance on the property market in Hanoi is ticking in favor of home buyers as prices have taken on a downtrend while secondary investors are trying to escape from the market.
Buyers in the local residential market now not only have a chance to acquire properties at the original prices from developers but also are offered incentives via different promotional programs. Like HCMC, the residential market in Hanoi saw a downward trend in the second quarter of this year when many secondary investors seeking to run away from the market agreed to resell their properties even at a loss to redeem capital given the increasing pressure in the market. Meanwhile buyers have shown prudence in purchasing homes, waiting for housing prices as well as banking interest rates to further come down.

Savills Vietnam has just released its quarterly report, saying that the average secondary asking price in the residential market in Hanoi decreased 1% against the previous quarter. Except regions such as Gia Lam, Cau Giay, Thanh Xuan and Long Bien where the asking price remained stable or slightly increased, the asking prices in the remaining districts decreased from 2% to 8% in the second quarter.

The primary market saw 17 active projects provide some 3,400 units, with prices ranging from US$800 to US$3,200 per square meter. However, the primary stock was 50% less than in the previous quarter, and the overall apartment market had a low absorption rate of 16% in the second quarter.

Apartments with the lowest asking price had the highest absorption rate. Grade C recorded the highest absorption rate at 26%, followed by Grade B at 11% and Grade A at 5%, according to the market researcher.

Commenting on the market, Savills said with more than 50% of the population aged under 30 years, the apartment market in Hanoi was still potential in the long-term. However, the current tighter monetary policy had made it more difficult to acquire bank financing, which is limiting demand.

With the same view, Knight Frank Vietnam said except for the retail market, the Hanoi property market experienced a general slowdown in activity for most asset classes in the second quarter as the Government’s restrictions on bank loans to non-manufacturing sectors continued to strangle credit to the property market, with developers and home buyers alike having difficulties raising finance.

The property services provider said the second quarter saw less activity in the apartment market than in the previous quarter, and a lower number of successful transactions of units. In general, the market performance on the demand side remained relatively flat during the first half of this year in all segments.

Mid-end and affordable projects continued to dominate the market as developers target the stronger demand from owner occupiers in these segments. Apartments with prices from VND1 billion to VND2 billion per unit have been growing due to urbanization, population growth and modest income levels.

Knight Frank said although prices have become more affordable, sales for many developers were expected to be difficult. This was due to the large amount of choice availability in the market. In addition, there was likely to be more end users in the market than investors, as the apartment for sale market is considered to be not as lucrative as before.

According to the company, new supply will continue to come onto the market in the coming quarters, although completion dates of projects are not always fixed and can vary from initial estimates.

Specifically, the market is expected to welcome about 2,000 units from mid-end projects such as Green Park Tower, Golden Land and Hoa Binh Green City in the next quarter. Prices of these projects are expected to be in the range of US$1,500 to US$1,800 per square meter.

Commenting on the market trend, Knight Frank said as current supply remained high, buyers would have more choices and were becoming more aware of the available options. Therefore, differentiation and customer centered orientation would be a number one tactic for smart developers.

The performance of the apartment market would be directly linked to inflation, and once inflation comes under control and the monetary policy is relaxed, it is expected to see the apartment sector to pick up in activity.

However, some projects are on hold as developers are waiting for confidence to come back to the market so as to launch their projects. Meanwhile, some developers who have launched their projects are looking for ways to clear stocks, including leasing their apartments.

Some experts projected that sluggish sale and increasing stock would continue to pose more pressure on the apartment market, and apartment selling prices in both HCMC and Hanoi cities would go on softening towards the year-end.

According to Savills, the residential market in Hanoi will see 31,000 units contributed by 60 condo projects across districts in the city to come online in the next three years.

Source: SGT