Moves to slow the damage being done by the pandemic and curb resulting land fever issues have helped keep the fortunes of the domestic real estate market in good stead so far in 2021.
Property prices in Ho Chi Minh City continue to rise even amid the pandemic. Photo: Le Toan
In the first six months of the year, Vietnam’s average GDP reached 5.64 per cent, of which real estate grew by four per cent over the same period.
Reported land fever reduced in the second quarter, stemming from the Ministry of Natural Resources and Environment requesting 26 local authorities to inspect the planning, leasing, and transferral of land in March.
The interest in land plots located within a radius of about 50-100km from Hanoi also decreased sharply. In which, Thai Nguyen decreased by 6 per cent, Bac Giang by 35 per cent; Bac Ninh was down 38 per cent; and Hanoi’s Quoc Oai district in fell by 17 per cent, according to figures released by Batdongsan.com.vn.
In Q2 the outbreaks of COVID-19 have led many localities across the country to apply social distancing measures, meaning the residential real estate market in Ho Chi Minh City and surrounding areas only truly operated mainly in April and early May. Notably, there was a significant decrease in supply and consumption in the apartment segment.
Meanwhile, DKRA Vietnam released that in Ho Chi Minh City, with limited new supply, the price of all segments has increased. Specifically, in the second quarter, land plots in both the city and neighbouring provinces recorded a more abundant supply than the first quarter, increasing 125 per cent. The consumption rate, meanwhile, increased by 59 per cent.
The apartment market in Ho Chi Minh City and nearby recorded a slight decrease in supply and consumption compared to Q1, of which supply dropped by 28 per cent and consumption fell by 26 per cent.
Notably, the Ho Chi Minh City market recorded more exciting developments with new supply mainly from Grade A and B apartments. There were not any Grade C or affordable apartments released in the market during this time.
In the second quarter, apartment prices in Ho Chi Minh City saw a slight rise of about 3-5 per cent compared to the beginning of the year and were mainly in the next phase of nearly completed projects.
The new supply of townhouses and villas in the metropolic and in provinces next door had a sudden surge, about 78 per cent compared to the previous quarter, but only concentrated in the first period of the second quarter, according to DKRA.
Dong Nai province continued to lead the supply and consumption of the whole market, while Ho Chi Minh City experienced a sharp decline due to the influence of the social distancing measures implemented for the latest wave of the pandemic.
In the hospitality segment, the supply increased significantly in coastal townhouses and shophouses (up five times) and condotels (up 26 per cent) compared to the previous quarter. These hospitality projects are concentrated on Kien Giang’s Phu Quoc Island, and in Ba Ria-Vung Tau and Binh Thuan provinces.
The consumption of the market as a whole from the end of the first quarter to the beginning of the second recorded positive signals. Still, there was a decline from the middle of Q2 due to the widespread impact of the pandemic.
A forecast from some experts pointed out that most segments will maintain new supply at the same level of the first half of 2021, but apartment supply may increase slightly. In particular, the new supply of land plots is concentrated mainly in the market of neighbouring provinces from Ho Chi Minh City. The demand may recover in the latter months of the year if the pandemic is under control.
The real estate market movement will inevitably depend much on the process of mass vaccinations in the coming months. Currently, the government is making significant efforts in community vaccination. The number of people vaccinated is likely to increase rapidly in the third quarter of 2021 with millions more vaccine doses due to arrive in the country in Q3 and beyond.
The government is aiming for 50 per cent of workers in the major cities to have access to vaccines by the end of the year and if this scenario plays out according to the schedule, the demand for real estate transactions will be expected to grow.