An apartment in newly-established Thu Duc City
In 2020, Nguyen Tuan Hai from Lien Chieu District in the Central City of Da Nang moved to HCMC with his wife and children. He worked for a company in HCMC’s Tan Binh District. Since then, he has struggled to find a house to live in. Because he wanted a more spacious living and dining space during the prolonged fourth epidemic last time, he was looking to buy an apartment, hoping that during the epidemic, the price will be comfortable.
He asked brokers to help find an apartment and finally, he found an apartment project in Tan Binh District with full of utilities. He could move into the apartment right away, but he moaned the price was too high compared to last year.
Therefore, he tried to find other projects in neighboring districts, but the prices of all apartments have surged by 5 percent-10 percent. Accordingly, he had to borrow money from relatives to buy a 60 square meter apartment.
Similarly, the prices of apartments in suburban districts are also heating up. The current price of the Picity High Park project in Thanh Xuan 13 Street in District 12 invested by the Housing Development Investment Company fluctuates around VND55 million (US$2,374) square meters, an increase of VND10-VND15 million square meters compared to the previous sale periods, and the apartments are almost sold out.
Prices of apartments in newly-established Thu Duc City. For example, BCG Land's King Crown Infinity project in Vo Van Ngan Street has just been opened for sale in phase 1 in early December 2021, with an average price of VND85-VND90 million square meters, equivalent to VND5.5 billion for each apartment.
Recently, an apartment of CapitaLand's Define luxury project in Thanh My Loi ward in Thu Duc City costs at VND125 million square meters. All apartments are each priced at VND23 billion.
Similarly, the market for apartments in the central area, especially in District 1, is also escalating. Specifically, salesmen of the One Central Saigon project in Ben Thanh quadrangle in District 1 offered the price of $25,000 for an apartment.
The project consisting of two towers and 55 floors is considered branded real estate. Ms. Ngoc Ha, a real estate broker, revealed that the price of $25,000 square meters does not include VAT and management fees.
With an area of 90 square meters-275 square meters, apartments at One Central Saigon are priced from more than US$2 million to $6.8 million or equivalent to VND48million -VND160 billion.
According to Director of batdongsan.com.vn in the South region Dinh Minh Tuan, apartments have gone upstream of price increases while the epidemic is still complicated, due to real estate tycoons leads.
Due to the inadequate supply of apartments, some investors with strong financial potential have controlled the property market. They begin to set prices much higher than the established price level. In addition, the cost of land use fees and project development costs increase every year, making apartment prices continuously establish new premises.
In addition, the cost of construction materials for an apartment project such as iron, steel, sand, cement is increasing and this has not shown a pause. This contributes to the increase in apartment prices, especially for projects with construction time and progress over several years.
Duong Thuy Dung, Senior Director of CBRE Vietnam, said that the primary price will continue to increase when the demand increases steadily and the land fund in the inner city of Ho Chi Minh City becomes increasingly scarce.
The primary asking price of the high-end and mid-end segment is expected to increase between 3 percent-7 percent yearly. The luxury segment will see the highest growth rate of 7 percent-8 percent thanks to the upcoming branded apartment projects, while the price of the affordable housing segment will not fluctuate much due to the lack of new supply.
In the apartment market, new opening prices are expected to continue to increase in the last quarter of 2021 due to the pressure of land shortage and escalating construction material costs. The rising price level causes demand to gradually shift away from the central area with more affordable prices. This trend is becoming more and more obvious in the context of reduced income due to the impact of the pandemic, Ms. Dung said.
Some real estate experts believed that the market is like a long compressed spring that is bouncing up strongly. Currently, investors have paid more attention to the real estate market in HCMC; therefore, the market recovery is foreseeable and will continue to increase.
Chairman of the Vietnam Association of Realtors Nguyen Van Dinh said that the culprit of the hike in housing prices is the limited supply whereas the demand is high. In the context of 2022, the upward trend of real estate prices will not stop.
Reports from market research companies show that, in the third quarter of 2021, Ho Chi Minh City and the southern provinces continue to see the price of apartments and townhouses continue to escalate.
Specifically, the average asking price of apartments in Ho Chi Minh City increased by four percent compared to the previous quarter. Thu Duc City area is the locality with the strongest increase in house prices with an average increase of 15 percent-20 percent.
Binh Chanh and Binh Tan districts have seen a two percent-five percent increase in house prices, while other districts in the southern metropolis have seen an increase of two percent- nine percent in housing prices on average compared to the previous quarter.
