House Prices In HCM City Are At The Highest Level In Four Years

Savills Vietnam said that house prices in Ho Chi Minh City increased sharply in the second quarter, being at the highest price in four years and promising to continue this momentum in the remaining months of 2016.

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House prices continued to grow strongly

Specifically, in quarter 2/2016, the price index of housing increased by 1 point quarter and 3 points per year, reaching 92.7 points. According to Savills, apartment prices will continue to increase steadily from the third quarter of 2015 and will continue to grow in the next quarter.

The market research agency also reported that the transaction volume was approximately 6,900 units, up 10% quarter-on-quarter and 34% year-on-year. The quarterly rate of absorption was stable at 17%, down 2 percentage points year-on-year.

Quarterly housing price index in HCMC

Although the volume of A-class apartments rose by 74%, the absorption rate fell by 5 percentage points due to the relatively new supply. Meanwhile, Grade B apartments dominate the market, accounting for 49% of the total transaction volume.

Contrary to the HCMC market, housing price index in Hanoi continues to decline. In the second quarter, the house price index was 104.7 points, down 3 points quarter-on-quarter and 3.5 points per year with the average selling price of VND26.3 million / sqm.

Market absorption was at 35%, up 1 percentage point quarter-on-quarter, similar to the previous quarter with 6,000 units sold, up 7% quarter-on-quarter and 30% year-on-year.

Class B is the market leader with 73% of total trading volume and 40% of absorption. Followed by Category C with an absorption rate of 25% and Grade A with a significant increase to 28%.

Office rentals will increase by 4% over the next three years

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Savills said in the second quarter of 2013 it was 85.3, up 2 points on a quarterly basis and 7 points on a yearly basis. This improvement comes from a 1 percentage point increase in rents quarterly and 4 percentage points year-on-year, with rents rising by 1% quarter-on-quarter and 5% year-on-year. The average occupancy rate peaked at 97%.

Grade A and Grade B projects in the CBD are well functioning, with a regional capacity increase of 3 percentage points and rents up 4% year on year. Central office performance index rose one point on a quarterly basis and six points on a yearly basis.

Off-center rents continued to increase by 1 percentage point quarter-on-quarter and 5 percentage points year-on-year, making the region’s index two points higher by quarter and year-over-year.

In the second quarter of 2016, total sales reached approximately 14,200sqm, down 46% quarter-on-quarter and 44% year-on-year, as most projects were operating at full capacity.

With office demand rising, Grade A and B rentals are expected to increase in the near future. Savills forecasts rent growth will be around 4% per year for the next three years.

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