Why are Secondary Villas and Townhouses Popular in Ha Noi?

Limited New Supply and Few Transactions

According to Savills Report, in Q1/2023, the landed property market in Ha Noi was slow, given the limited new supply and few transactions.

In Q1/2023, primary stock decreased considerably to 759 dwellings from 14 projects, dropping by -18% quarter-on-quarter (QoQ) and -50 % year-on-year (YoY). New supply of 29 villas came from an existing project in Me Linh and decreased by -36% QoQ and -96% YoY. However, 27% of the primary stock is on hold as developers are using their real estate assets to pay bonds or adjust prices.

There were only 88 sales in Ha Noi, decreasing by -47% QoQ and -78% YoY. Quarterly absorption of 12% was the lowest since 2016. Projects with affordable prices in Me Linh and Gia Lam had 69% of sales this quarter.

Ms Do Thu Hang, Senior Director, Advisory Services, Savills Ha Noi, shared: “The market in the first quarter was quite gloomy with low buyer confidence, limited new supply, high prices and an early Lunar New Year holiday. Buyers are also increasingly aware of legal standing and scrutinise legal issues carefully before buying.”

Primary prices remained high, despite decreasing QoQ. Primary villa prices fell by -14% QoQ but are still at VND 111 million/sq m. Townhouse primary prices also dropped by -3% QoQ to VND 167 million/sq m. The drop resulted from the entry of new affordable stock and low-priced inventory in Me Linh District.

“There will always be residential demand in Ha Noi given its notable and growing population, rapid urbanisation, and positive migration. However, there are discrepancies between supply and demand that must be resolved,” said Ms Hang. 

Heightened Secondary Demand

The limited primary stock and high primary prices are likely to support secondary demand. Ms Hang explained: “Increased bank interest rates and credit tightening meant that villa and townhouse secondary prices decreased in the first quarter. They averaged VND 22 billion per dwelling, which is -17% lower than the primary average. Secondary products also offer buyers peace of mind as the legality is usually clear. Most projects have been handed over for a long time and already have LURCs, which boosts confidence significantly.”

However, Hang noted that old secondary products could impact secondary prices and sales.

“Many investors held onto their properties for many years, which means they might require upgrades or renovations. This will impact prices as buyers will need to account for renovation and remodelling costs.”

Outlook for Landed Properties in Ha Noi

Resolution 33/NQ-CP 2023 issued in March 2023 will be a mechanism to reduce difficulties and streamline real estate development.

“Until the end of the year, 1,865 dwellings from 16 projects are expected to launch. Me Linh District will have the lion’s share with 18% of the future stock, followed by Hoai Duc with 17% and Thanh Tri with 14%. The products are mostly on the external boundaries of Ring Road 3,” said Hang.

In addition, infrastructure development will also support real estate development. Although growth is gradual, there are still positive changes.

“Key upcoming projects of the city include Vinh Tuy Bridge Phase 2, Metro Line 3 (Nhon – Cau Giay), Ring Road 3.4 and Ring Road 4. They will benefit surrounding areas such as Hoai Duc, Cau Giay, Nam Tu Liem, Gia Lam, Long Bien, Hoang Mai, and Thanh Tri. Since the opening of Metro Line 2A, we noticed that the primary villa prices in Ha Dong District increased by 37%, townhouse prices by 26% and shophouse prices by 6%,” Hang added.

The economy remains sound, and investors are still confident in Viet Nam’s potential. Despite fewer sales, housing demand will remain high.

Conclusion

To learn more about the landed property market in Ha Noi, contact Savills Advisory Services. Data can now be aggregated at a national level, which gives a holistic view of inventories. Stay informed with the latest market research.