The downturn in the secondary property market has led to a 10-20% average decline in apartment prices in Ho Chi Minh City. An example is Anh Tuan, who is selling a 78-square-meter apartment in the 4S Linh Trung building for VND28 million (US$1,116.2) per sq.m., reflecting a 15% reduction since the beginning of the year. Similar units are available for even lower prices at VND26-27 million per sq.m., comparable to 2018 purchase prices. Owners attribute the decline to extended construction periods (8-10 years) without issued title deeds.
Xuan, the owner of a 76-square-meter apartment in District 7, notes a nearly VND300 million decrease in her property’s price, approaching its 2021 purchase price. On trading forums, she observes apartments in the same building priced at just VND38-42 million per sq.m., posing a significant potential loss for her.
The oversupply of apartments has contributed to the overall decrease in average prices. Apartments in the Opal Boulevard building, for instance, are priced at VND33-36 million per sq.m. on the secondary market, marking a 14% reduction from the previous year. Nearby Centum Wealth and Urban Green buildings have also seen average prices decline by 12% and 6.8%, respectively, from the same period last year.
A recent VnExpress survey shows that the rate of price cuts has gradually slowed down to 10-12% towards year-end, compared to more drastic cuts earlier in the year of 20-30%, which also affected the average apartment price.
According to 2022 statistics from real estate consultancy Batdongsan, average apartment prices had already dropped in many areas of HCMC. For example, in Tan Phu District, the average apartment price is now around VND39 million, down 20% from 2022. Similarly, prices are down 16.5% from 2022 in Thu Duc and down 14.6% from 2021 in Binh Tan.
Apartments closer to the center of the city have fared better, with average prices decreasing by only 3.2-6% from last year in some districts, like Binh Thanh and District 2, and even increasing in some others, like Binh Chanh by 5.8% and District 7 by 3.2%.
A Batdongsan spokesperson clarified that prices on both the primary and secondary markets were used to calculate the average figure. The primary market, having fluctuated less year-to-date, saw the price cuts primarily resulting from changes on the secondary market.
A report from real estate agency CBRE Vietnam stated that apartment prices in HCMC dipped 4-6% on the secondary market during the first three quarters of 2023, while they sank 4.6% on the primary market in Q2. Statistics from the Ministry of Construction indicate that in Q3 prices increased on the primary market year-on-year but decreased by 2-3% from the previous quarter.
Duong Thuy Dung, COO of CBRE Vietnam, attributed the decline in apartment prices to higher loan interest rates in early 2023, putting pressure on property investors to “sell at all costs.” With lower interest rates now, investors are not as willing to slash prices significantly.
However, apartments on the secondary market face competition from the primary market as sellers there may indirectly drop prices through discounts and promotions that gradually increase towards year-end. Besides promotions, some sellers on the primary market allow low monthly payments of VND2-6 million and up to 2-3 years of debt extension.
Buying on the secondary market requires a large lump sum, often leading buyers to obtain a loan at less favorable interest rates. According to Dung, apartment prices will not decline significantly until early 2024, but they also will not return to their prime rates experienced in 2021-2022. The market may begin to recover in late 2024, starting from in-demand sectors with high liquidity, such as social housing and affordable apartments. Similarly, properties on the secondary market need to be affordable to attract customers.
