Villa and adjacent house prices in Hanoi depreciate in Q2/2012: CBRE Vietnam

Hanoi’s real estate market in the second quarter of 2012 saw an increase in new apartment supply, however prices of villas and adjacent houses have depreciated and market liquidity remained low, CBRE Vietnam said in its report at the press conference on Hanoi’s real estate market in Q2/2012 recently.

The market may not recover in the short term

CBRE Vietnam representatives said that the State Bank of Vietnam (SBV)’s policy to lower the dong deposit interest rate cap to 9 percent per year will have a certain lateness to come into effect for the real estate market.

Specifically, almost the loan applications are ineligible to borrow capital. Therefore, the lower interest rates over time, according to CBRE, cannot positively impact real estate market in the short term. The market will not recover quickly and immediately.

According to statistics reported by CBRE, in Q2/2012, Hanoi has around 1,700 newly-offered apartments, up about 600 units over the previous quarter. The increase in supply was mainly due to the expectations from investors on the reduction of deposit interest rate from 14 percent to 9 percent per year in just three months.

Of the new supply of apartments to the market, 100 percent have prices at less than 30 million dong/m2, 50 percent have prices at less than 20 million dong/m2. This showed that the popular apartment segment is more interested. The new supply is mainly in outskirts districts such as Ha Dong (accounting for 66%), Tu Liem (21%) and the east area (9%).

Land, villa and adjacent house market in Q2/2012 continued to fall and liquidity was low.

According to CBRE, the market is still manipulated by speculators. Many investors and speculators are still trying to cut losses and therefore prices continued downward trend by 10 percent -30 percent over the previous quarter.

New supply in this market segment is also low and there were few new projects.

To-be completed apartment supply of about 9,400 units and approximately 11,000 completed apartments in 2004-2011 have put significant pressure on the market. Many urban zone projects, although adjacent houses and villas have been completed, have still been left unoccupied.

Generally, real estate market for housing segment in Q2/2012 had better evolutions against the end of last year, in both new supply and market liquidity. However, the number of successful transactions has still been seen only in a few projects and affordable housing segment.

According to CBRE, on the primary market, prices will be hard the further decrease in the future because the market has better signs. The volume of buyers is focusing on projects that have good completion progress and to-be completed projects.

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