The Hanoi real estate market shows signs of improvement in the second quarter of this year, CB Richard Ellis Vietnam Ltd Company (CBRE Vietnam) has said.

In the condominium-for-sale sector, the quarter welcomes 1,700 newly launched units, a slight increase in the 1,100 units launched in the first quarter.

Supply growth was mostly attributed to improved market sentiment following a series of interest rate cuts from 14 percent to 9 percent over just three months, Richard Leech, CBRE Vietnam's executive director, said.

Primary prices however were low, about 1,500 USD or less per square metre.

In an attempt to attract buyers without resorting to discounts, a number of developers were offering to sell bare-shell or basic options for 30 percent less than the initial asking price, he said.

This had expanded the potential client pool to include those with lower budgets. Another strategy has been worked out to offer preferential mortgage lending rates, which has been made possible by recent rate cuts. The subsidised mortgage rate, offered until the unit's handover, can be as low as 6 percent-7 percent per annum compared to the market rate of 15 percent.

On the secondary market, asking prices saw the largest quarter-on-quarter drop since its straight fall from the same period in 2011. Compared to the residential market downturn in 2008, the 2011-12 crisis seemed to be worse in terms of both length and magnitude, Leech said.

That said, buyer interest seemed to be back, with an increasing number of enquiries in the first half of this year, he added.

Real estate becomes more attractive when interest rates decline. Notably, the mortgage lending rate is now back to the pre-crisis level in 2010 (15 percent) from its peak in mid-2011 (23 percent).

However, it was by no means certain the market will pick up anytime soon as the future direction of the economy remained unclear. Developers should remain vigilant, Leech said.-VNA