HCM City real estate market lopsided, unsustainable: HoREA
HCM City (VNS/VNA) - 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.
While low-end condos
accounted for only 24.7 percent of total supply, the high end accounted for 30
percent.
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.
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 said, adding that high crude
oil prices have an impact on the country’s economy in general and the real
estate market as a result.
According to the organisation,
foreign direct investment in housing would increase in 2019 but there would be
a shortage of land.
While the mid- and
low-priced segments, including condos priced at around 1 billion VND (43,000 USD),
would continue to see much of the demand, supply would remain modest, it said,
adding that the high-end condo segment would likely face challenging times next
year.
Chau predicted tough
competition in the segment because of excess supply. He said competitive
projects would be those in ideal destinations with many amenities, and high-end
condo projects in central areas would be more competitive because authorities would
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 percent. –VNS/VNA