Sales are down but new supply is healthy, according to Savills Vietnam.
Despite falling sales, the apartment for sale segment will be continue to be a bright spot in the market thanks to rising supply, the effects of the amended Law on Housing and the amended Law on Real Estate Business, and financial guarantees from banks now being required for real estate projects.
“In the first half of this year the supply of apartments for sale reached over 121,400, up 180 per cent compared to 2014 as a whole,” Ms. Do Thu Hang, Head of Research at Savills Hanoi, told a press conference on July 10 on the real estate market’s second quarter performance.
Hanoi’s total apartment supply was approximately 121,400 units from 199 fully sold and 82 active projects. The total primary stock was 13,400 units, increasing 4 per cent quarter-on-quarter and 24 per cent year-on-year.
Current Stock Q2/2015
Despite the strong increase in supply, the segment’s sales were down in the second quarter. The latest report from Savills showed that some 4,630 units were sold, 18 per cent less quarter-on-quarter, while the absorption rate fell to 34 per cent, down 9 percentage points quarter-on-quarter.
Market performance Q2/2015
The apartment for sale segment is still expected to be the most vibrant in Hanoi into the future, however. Financial guarantees from banks are an important motivating factor for buyers and bank credit has become the primary financial source for both owner-occupiers and investors.
Savills predicts that by the end of this year 26 projects supplying 12,600 units will come online. The amended Law on Housing and the amended Law on Real Estate Business, meanwhile, should increase demand. “Sales are expected to remain at a high level in the remaining quarters of 2015, but there could be elements of speculation distorting overall demand,” the report stated.