Vietnam’s housing market is expected to enjoy another good year after record sales in 2015 aided by improved economic conditions and infrastructure and lower interest rates.
According to the industry’s estimates, apartment sales in Hanoi hit around 28,300 units in 2015, a 70 percent rise from the previous year. In Ho Chi Minh City, the estimated number ranged between 24,000 and 36,000, an increase ranging from 50 to 100 per cent depending on whose figures they are -- the city real estate association’s or property consultancy companies’.
In the HCMC primary market, apartment prices rose 6.1 percent year-on-year in the fourth quarter, while in Hanoi, they were up 7.4 percent, according to property consultancy Jones Lang LaSalle.
Stephen Wyatt, head of JLL Vietnam, expected prices to continue upward this year, rising 1-2 percent every quarter in HCMC.
Duong Thuy Dung, director of research and consulting at CBRE Vietnam, said home buyers are moving towards higher-end products.
“In 2009-14, affordable properties priced below VND1.3 billion (US$58,000) per unit constantly accounted for the largest proportion of successful transactions in Ho Chi Minh City.
“However, last year mid- to high-end properties, priced at VND1.3-5 billion, were the best sellers, accounting for over 75 percent of transactions.”
Wyatt said around 25,000 new apartments are expected to be launched in HCMC this year, with the high-end segment making up 30 percent.
Asked about the threat of a bubble forming this year, he said while he does not see “any cause for such concern”, it is necessary to “monitor the market.”
The change in sentiment among both developers and buyers mostly happened in 2015, he said.
“I have never worked in a country where the real estate market turns on and turn off very quickly like it does in Vietnam.”
He said developers, both foreign and local, should seek market research from consultancies before undertaking projects to ensure their developments are in line with what end users are really looking for.
“We don’t want to go back to the days of 2007 and 2010 when developers just built any product because the market was so hot and then failed to sell their products.
“Banks also play a very important role in the real estate market. They have to be very aware of market conditions as well in order to not provide credit to wrong developers to ensure the market does not overheat [again].”
Le Hoang Chau, chairman of the HCMC Real Estate Association, agreed with Wyatt that there are no signs of a bubble yet.
“The government will continue its cautious credit policy this year, they won’t let property loans grow so fast like in 2007.
“In addition, I don’t see an oversupply in the property market at the moment.”
But he too said it is essential to keep a close eye on the market since the number of secondary market sellers [of new apartments] went up three-fold in 2015 and prices at some high-end projects rose “quite sharply”.
Marc Townsend, managing director of CBRE Vietnam, warned: “When the market grows too big, too fast and overhyped, it easily derails. Be fearless, not foolish.
“It is wise to open training centers for property sales persons, who have not received as much training in technical details as car sales persons and yet are preparing for the next level of competition with significantly wider supplied options, increasing prices and larger client pool, particularly when the foreign buyers are involved.”