The real estate market of Vietnam, particularly the segment encompassing land-based homes such as villas and townhouses, is witnessing noteworthy trends as we progress through 2024. Recent analyses reveal significant price hikes, underlining the complexity and dynamism of this pivotal sector within the country's economy.
According to Savills Vietnam, the average price of land-based homes in Ho Chi Minh City has surged to approximately 330 million VND per square meter. This figure marks a staggering 20% increase compared to the previous quarter and reflects a threefold rise since 2020. Unsurprisingly, the upward trend has not come without its challenges, particularly for properties priced above 30 billion VND. Giang Huỳnh, the Director of Research at Savills, notes, "The number of successful transactions for properties priced above 30 billion VND has dropped significantly, with only 60 recorded last quarter," indicating the market’s tightening grip on high-end properties.
The persistent rise in home prices is creating strain on the market's absorption capacity. The total number of trades for properties has diminished, highlighting buyer hesitation. The average new sale price for villas and townhouses reported by JLL for the fourth quarter of the year sits at around 430 million VND per square meter, indicating an 11% increase compared to the corresponding period last year, which only adds to the market’s mounting challenges.
Income levels coupled with rising prices prompt cautious sentiment among buyers, particularly with many residences exceeding one million USD. Consequently, demand for secondary market products is waning as buyer apprehensions increase due to fluctuative interest rates and price pressures. Barring recovery, the general quarter saw only 58 new properties sold, marking a staggering 50% drop compared to the previous quarter.
Interestingly, the luxury housing segment continues to garner interest, with Cushman & Wakefield reporting immense demand for low-rise properties, which have experienced average price increases of 41% over the past year, averaging 480 million VND per square meter. The observed growth is partly attributed to the inception of several high-value developments across Ho Chi Minh City, such as luxury complexes stretching from 120 to 750 billion VND each. Regions characterized as affluent, particularly Thủ Thiêm and Thủ Đức, continue to uphold property valuations, adding another layer to this complex market dynamic.
Despite the prevailing atmosphere of uncertainty, there remains hope for revitalization within the market, primarily centered around new infrastructure developments and easing of regulatory challenges. The government is actively seeking resolutions to expedite prominent projects, with 22 sets of plans currently under review for simplification.
HoREA has been proactive, urging the State Bank to authorize credit access for first-time homebuyers aged 18 to 45, allowing them to engage with the market under more favorable conditions. The association's calls signify the necessity for supportive financial frameworks to boost buyer confidence amid persistent market volatility.
Even as price increments mark the narrative, the question looms: are investors ready to re-engage this market? Despite signs of recovery, there remains caution. Data reflect skepticism among buyers, with extensive discussions on how trends point to increasing prices against decreasing purchasing power. Per one unnamed analyst, "While purchasing power has dwindled, primary prices have continually risen, now nearing 200 million VND/m2," painting a contradictory scenario for potential buyers.
Looking forward to 2025, projections indicate the real estate market may welcome around 2,000 new properties. The expected infrastructure goals are viewed positively, marking increased optimism about future activity levels. Giang Huỳnh predicts, "We predict the high-end market will maintain its dominance due to limited land availability and rising costs," establishing the foundation for anticipated growth across varying segments.
Overall, the current climate merged with notable price trends portrays Vietnam's real estate market as multifaceted and challenging yet ripe with potential. Stakeholders await developments, hoping they propel the sector back on course, aligning expectations with market realities for 2025 and beyond.