HCM City real estate market lopsided, unsustainable: HoREA

Monday, Dec 31, 2018 08:07

The HCM City housing market showed signs of unsustainability in 2018 due to an imbalance between supply and demand. — Photo cafeland

The HCM City housing market showed signs of unsustainability in 2018 due to an imbalance between supply and demand, a property industry business group said.

In a review of the market in 2018 and forecasts for 2019, the HCM City Real Estate Association (HoREA) said there was excess supply in the high-end segment, it said.

While low-end condos accounted for only 24.7 per cent of total supply, the high end accounted for 30 per cent.

The association’s chairman, Le Hoang Chau, said this made the market top-heavy and unstable, explaining there is equilibrium only when the low-priced segment is the most dominant followed by the mid-priced segment and then the high-end segment.

In 2018 there was a shortage of housing for low-income people, he said.

But he assured that a bubble was not forming and there has in fact been a slowdown in new projects, supply and the number of transactions.

Challenging 2019

Speaking about the market next year, HoREA said there would be many challenges.

The trade conflict between the US and China would have a bearing, it feared. High crude oil prices have an impact on the country’s economy in general and the real estate market as a result, it said.

Foreign direct investment in housing would increase in 2019 but there would be a shortage of land, it said.

While the mid- and low-priced segments, including condos priced at around VND1 billion (US$43.8 million), would continue to see much of the demand, supply would remain modest, it said.

The high-end condo segment would likely face challenging times next year, it added.

Chau predicted tough competition in the segment because of excess supply.

“Competitive projects will be those in ideal destinations with many amenities.

“High-end condo projects in central areas will be more competitive because authorities will not grant a licence to any project in this area.”

The association said next year the city would call for bids for nine social housing projects.

The industrial property, office and co-working office segments would develop strongly in 2019, it said.

The association assured that there would be no bubble forming in the market next year either.

Chau explained that authorities had experience in taking timely measures to control the market and prevent any bubble.

"Property developers, banks, investors, and buyers too have experience by now," he said.

The association said next year it would be hard for developers to borrow from banks since credit growth is expected to be only around 16 per cent. – VNS

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