Hanoi apartment market growth slows down

Vietnamese capital registers lowest level of launches since 2014 as strict lending guidelines bite

Pham Hung street, Cau Giay district. Vietnam Stock Images/Shutterstock

After a period of strong growth, investor demand for Hanoi apartments showed signs of deceleration in the second quarter of 2019, although demand from owner-occupiers remained “healthy”, according to a new report from JLL Vietnam.

The take-up of apartments in the Vietnamese capital for Q2 2019 amounted to more than 4,660 units, down 65.3 percent from the last quarter.

End-user demand in the city is running counter to tightening access to mortgage, exacerbated by a stricter loan assessment process by commercial banks and increasing interest rates.

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Only 5,900 units were added to the market during the quarter, around half the adds in Q1 2019. The projected supply pipeline for the rest of the year stands at 10,000 to 15,000 units.

“Stricter lending regulations regarding high-end projects coupled with a scarcity of prime freehold land bank in the CBD are giving developers pause in launching new luxury developments in the near and medium terms,” JLL Vietnam analysts stated.

“Resale activity will remain lukewarm as buyers become more cautious and selective due to economic uncertainty,” they added.

Primary prices slightly improved, going up 0.5 percent on the quarter or 6.9 percent higher than the same period a year ago. Otherwise, developers have kept prices unchanged and even introduced discounts of as much as six percent due to downcast market sentiment from the stricter lending regulations.