HCMC Apartment for Sale Market 3Q21
New supply slumped to a record low
In 3Q21, new supply  dropped sharply at -73.4% q-o-q and -67.6% y-o-y, reaching 1,610 units. It broke the record for the lowest supply level since 2014. A series of new launching events were delayed due to social distancing regulations throughout 3Q21. Developers strongly applied digital technology to reach out to customers in the state of lockdown.
Demand shift to existing projects
Home sales reached 2,968 units in 3Q21, down -40.3% y-o-y due to restricted new supply. Mid-end remained the most preferred segment, contributing to 77% of the total take-up basket, mostly coming from the larger-scale projects such as The Origami - Vinhomes Grand Park. Limited launches amid wealthy demand boosted existing inventory transactions, increasing the sale rate of the whole market from 93% in 2Q21 to 94.1% in 3Q21.
Price escalation in the primary market
The average primary selling price achieved USD 2,683 per sqm, up 4.4% q-o-q and 10.9% y-o-y. Price grew due to limited supply and most new projects belonging to Mid-end and higher priced segments. Especially in the High-end apartment segment, the primary selling price achieved USD 5,099 per sqm, increased 3.9% q-o-q and 11.4% y-o-y, contributed mainly by new projects with a higher-than-average selling price. Otherwise, price growth trend spread throughout the inner district boundary, and even started to prevail in suburban districts, where many pre-launched projects with soft-launching prices were at a record high, compared with the area’s average.
Notably, surplus selling prices moved in line with high-quality construction and attractive sale promotion campaigns. To support buyers during the outbreak, developers established a new sale policy such as only a 1% payment per month or a discount on the total unit costs.
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Outlook: Market to recover strongly after the fourth outbreak
The market, compressed under the fourth outbreak impact, is expected to recover with multiple projects expected to launch a total of 10,000 units in 4Q21, equivalent to the cumulative supply of the first nine months. However, the forecast volume is estimated on the assumption that the “new normal” status will remain stable in the last three months of the year and the figure could be remarkably adjusted by any unexpected future events. The market witnesses an upward trend in the soft-launching prices of the upcoming projects due to the shortage of land banks and escalating construction material costs. Escalating selling prices have been driving demand to remote areas, thanks to more reasonable prices in this area. Furthermore, the trend of demand shifting to further areas is aided by the decreased income of potential consumers as a result of the pandemic's impact.
- Prices exclude VAT and sinking fund/maintenance fee.
- Official launch: Projects are considered as officially launched when the Sale Purchase Agreements are signed, typically upon foundation completion.
- The loan approved by owner’s collateral and other conditions.
Source: JLL Research