Housing prices in Ho Chi Minh City skyrocket amid crisis

Ever since the Covid-19 first hit Vietnam last year, it has taken a tremendous toll on the nationwide economy. For the past 8 months, 85,000 businesses have exited the market because of financial stress, Thanh Niên reported. 

With transportation compromised and consumer spending power reduced, most local businesses are doing their best to just stay afloat when promotions and discounts no longer work.

Interestingly, the opposite is happening in the property market. Believe it or not, Ho Chi Minh City’s housing market has recorded a price increase of 12%-14% in the residential segment during the 4th outbreak. 

Read on to see why the housing prices in Vietnam’s most Covid-19-stricken city are going through the roof.

Housing prices in Ho Chi Minh City are going through the roof

Image credit: VnExpress

Amid the fourth Covid-19 outbreak, the asking prices for new residential developments in Ho Chi Minh City are still on the increase. The market has registered an uptick in housing prices across developments targeted at high, middle, and low-income buyers. 

According to VnExpress, a property development has recently returned to the market with the sales of a second phase, selling at USD3,200 per square meter. This price equals to a 14% increase compared to that of its first phase in Quarter 1 of the same year. 

Several high-class developments in prime locations have also registered record-high price ranges in Quarter 2 of the year. 

One Central, Saigon
Image credit: Danh Khoi Real

The most notable example of which is the One Central, Saigon development in District 1 by Masterise Homes, selling at VND650-VND800 million (~USD28,530-USD35,114) per square meter. This asking price is the highest in the local housing market history so far.      

The reasons housing prices in Ho Chi Minh City keep soaring 

Image credit: VnExpress

To verify this information, The Smart Local Vietnam contacted Ms Ginny Nguyễn, sales manager at Savills Vietnam, for more insight.

According to Ms Nguyễn, the increase in prices in new housing developments is real indeed, but buying demand has declined immensely. On the other hand, there are many buyers who are looking to buy secondary homes at slashed prices.

“About One Central, Saigon, it’s a high-end development and we’re targeting the ultra-rich buyers, who account for around 1% of home investors in Vietnam’s property market out there,” Ms Nguyễn explained.

Savills Vietnam research expert Giang Huỳnh cites 3 reasons for the considerable hike in the prices of new housing projects:

“First and foremost, the cost of developing and building a housing project has increased over time. The second is the considerably low inventory of land in the urban area. The cost of investing in land and borrowing interests have also soared, coupled with delayed investment licensing, leading to a rise in the overall costs.

Last but not least, the shortage of new housing supplies have given developments that are on sale an edge and enabled developers to push the price up. This combination is the result of limited housing supply due to the Covid-19 pandemic.”

However, this phenomenon does not accurately reflect the demand and supply situation in the housing market, Giang told VnExpress.

The absorption rate, meaning the rate at which homes are selling, however, is quite low amid the fourth outbreak.  

This is quite a predicament for buyers.

The Covid-19 pandemic has cost many jobs and further widened the income disparity in Ho Chi Minh City. Our economy is still grappling with a pandemic-led recession. People will always need housing in this ever-expanding city, but the housing supply has been reduced due to the crisis. 

Building costs have also increased over time, pushing selling prices to new highs and making housing affordability a huge challenge.

Is buying a home in Ho Chi Minh City a distant dream?

As Vietnam’s largest, most populated, and most modern city, Ho Chi Minh City is considered the promised land in the eyes of many people. Before the Covid-19 pandemic, the city used to receive millions of immigrants every month who came here to work and study.

The city, accordingly, has had to expand in size and availability of housing to accommodate endless tides of newcomers. Because of high demands for long-term accommodation, housing prices and rental have increased over the years.

Even before the fourth outbreak hit, housing affordability had been an issue among young and middle-income buyers in the city.

Now that the Covid-19 has added fresh stress to everyone’s financial situation, the dream of owning a shelter in this concrete jungle has become distant for more people.

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Cover image adapted from: VnExpress

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