Ngoc Huyen in Hanoi’s Long Bien District listed a VND6.2 billion (US$236,000) apartment two weeks ago but has not received any inquiries yet.
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Apartment buildings in the west of Hanoi. Photo by Read/Ngoc Diem |
She has so far paid VND1.4 billion for it in bank mortgages and is now seeking to sell it for VND1.1 billion, but brokers have told her finding buyers is challenging.
“Brokers say the market is in a lull and selling will be difficult unless I cut the price further,” she says.
Trung Hieu in Dong Anh Commune says he has been unable to sell his VND10.2 billion apartment for a month despite being willing to accept a loss of VND300 million.
“I thought buying the unit directly from the developer will make it easy to resell at a profit, but in reality sales have been very slow.”
Flipping apartments these days has become challenging for many speculators who find the market cooling down after a period of surging prices.
Duc Dung, a broker specializing in apartments in eastern Hanoi, says the number of sellers contacting him has risen by 30-40% now from the third quarter.
This is the opposite of three months ago when most customers called him for opportunities to buy and snapping up all newly launching apartments.
Some were even willing to pay premiums to brokerages to secure the best apartments, he says.
Commenting on these trends, Vo Huynh Tuan Kiet, director of residential markets at property consultancy CBRE Vietnam, says apartment demand this year has largely been from speculators rather than end-users.
Asking prices of more than VND100 million per square meter are too high for buyers with actual residential needs, he says.
When prices far exceed affordability, there is a lull in the market, with sellers unwilling to cut prices and buyers being wary and expecting prices to fall, he says. The same thing happened for a few years from 2007 when prices froze after a surge, he recalls.
Nguyen Van Dinh, chairman of the Vietnam Association of Realtors, estimates 70-80% of transactions stem from investment and speculation.
With banks winding up their low-interest mortgage packages in recent months, speculators have been more reluctant to apply for new loans, driving down demand.
An expected rise in supply us also acting as a dampener. In this quarter, 11,000 new apartments are set enter the Hanoi market, taking total launches for the year to more than 32,300 units, surpassing last year’s number, according to CBRE.
Many of them are priced at a more reasonable VND50-60 million per square meter, it says.
“Many people, especially young buyers, are losing motivation to own property due to the wide gap between housing prices and incomes,” Dinh says.
They are opting to rent inner-city apartments or buy units in suburban areas at more reasonable prices.
