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Apartment prices soften but still out of reach
For many residents in Ho Chi Minh City, the current prices of apartments, which have dropped recently, remain a little too expensive.
With savings of nearly VND1 billion in his pocket, Ngoc Tu, an office worker in the city, plans to buy a home of his own after hearing that the selling price of apartments in HCMC is in decline given the market downturn.
He and his wife spent a fortnight driving through the streets and alleys of Nha Be and District 7, visiting dozens of locations from land lots and row houses to apartments.
However, he has yet to buy because the properties are located far from his office and they are too expensive.
During his journey, he passed An Hoa 1 condo project developed by Nam Long Group, and took a look at a 40-square-meter apartment.
He is surprised to see that the apartment, which is developed for relocated families and is quite old, is priced at VND930 million, some VND200 million more than in 2009.
Even with a billion dong, finding an apartment in a commercial condo project near the central business districts is impossible, except if you choose to buy an old condo.
At a time when credit for the property sector is being tightened and interest rates are still running high, purchasing an apartment in a condo project near the city center is beyond reach of most people due to high prices.
For example, with a budget below VND2 billion, a buyer may not find an apartment in the Orient apartment project on Ben Van Don Street in HCMC’s District 4 since the price is from VND28.5 million per square meter (sq.m).
In another development nearby, apartments in the Constrexim Square project on Ton Dan Street are being offered from VND25.5 million to VND30.5 million sq.m. With those inflated selling prices first-time buyers are still struggling.
To be able to buy an apartment with a limited budget, buyers have no choice but to move out to districts on the fringe of the city such Binh Chanh, Tan Phu, Binh Tan and Thu Duc, over 10 km from the city center.
For example, Korean firm IDE Vietnam is offering apartments in the Green Hills condo project in Binh Tan District from VND15 million sq.m, or around VND1 billion per unit. Also in the district, apartments in the Binh Tri Dong B condo project sell for VND550 million to VND900 million per unit.
Some market research companies recorded that selling prices of apartments at all grades decreased in the first half of this year, and the trend is expected to continue on the market downturn.
According to Cushman & Wakefield Company, selling prices of high-end apartments in the central business districts have decreased from VND78 million sq.m to VND77.5 million in the last quarter.
Meanwhile prices of mid-end condos dropped to VND32 million sq.m and affordable condos saw selling prices fall to VND14 million sq.m in the last quarter.
Abundant supply offers more choice to potential buyers, but a meager budget plus high interest rates are discouraging many people. Many people have a wait-and-see attitude, hoping housing prices and interest rates will come down.
Most developers have not slashed their selling prices for fear that the action would leave a negative impact on the previous buyers. To boost sales most developers have to offer different incentives to entice homebuyers. Instead of cutting prices, they woo potential buyers with a flexible payment scheme, interest rate support, cash discounts and lucky draws for luxury cars, motorbikes and gold.
Nguyen Phu, sales manager in the Saigon Pearl project near the Thu Thiem Bridge in Binh Thanh District, said sales were slow but the company had no intention of slashing the selling price of its Sapphire apartments that stands at US$2,300 sq.m, nearly VND5 billion per unit.
The current price has decreased US$600, though, from the US$2,900 sq.m recorded at the project launch.
Some market observers projected that the residential market would continue to see prices soften further throughout the remainder of this year but it remains to be seen how low prices will play out.
tuoitrenews, TBKTSG
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