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Apartment market still grapples with weak demand
Foreign real estate services providers in Viet Nam agreed that the market of apartment for sale in HCM City continues to experience difficulty because of weak demand in the second quarter.
Demand is currently being restricted by the availability of mortgages, especially from Vietnamese lenders.
This underlying demand is expected to be unleashed as interest rates are reduced to more practical levels, according to Nicholas Holt, Knight Frank Viet Nam's market research deputy director.
Many potential buyers are hesitating or adopting a "wait and see" approach, due to difficulties accessing finance and to expectations of future price movements, according to Holt.
"The tighter monetary policy has lowered home buyers' affordability, thus lower-priced apartments are seeing the most transactions," said Truong An Duong, head of Savills Viet Nam's HCM City's market research division.
Holt, however, noted that demand was strongest in the affordable segment, with well designed, smaller units in the range of US$35,000 to $60,000 attracting strong interest.
Fewer buyers could complete all cash transactions, while mortgage loans were proving even less popular than ever before.
Thus, tremendous pressure is being placed on developers to offer big discounts or flexible payment terms, according to Adam Bury, CBRE's senior manager for research and consulting.
CBRE's statistics showed decreases of the average asking price across apartment segments on the secondary market.
For luxury-grade apartments, it fell to less than $4,500 per square metre in this year's second quarter, from a high of $5,000 in 2007. It fell to around $1,900 from $2,300 respectively for high-end apartments.
There were small changes in the mid-end and affordable apartments.
During the second quarter, six apartment projects entered the primary market in HCM City, a significant drop from 14 new projects during the previous quarter, according to Savills Viet Nam.
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