Over the past five years, Ha Noi housing market has undergone 2 main phases with strong fluctuations. However, positive signs in the last 6 months of 2020 and early developments in 2021, imply the early stages of recovery driven by domestic buyers.
According to Mr. Nguyen Duc Them, Savills Hanoi International Residential Sales Senior Manager, over the past five years Ha Noi has been under rapidly increasing supply. The West, planned as the new CBD of Ha Noi, with a 60-70% supply share was the most dynamic area. In 2019 and 2020, strong supply increases in the Eastern area were mainly due to two major projects Ecopark, and Vinhomes Ocean Park. There was little new supply to the remaining areas of Ha Noi.
The central area with scarce development land has seen a negligible proportion of new supply. The Ha Noi housing market has been through two main phases over the past five years.
From 2015 to end 2018, all segments recovered to perform well, especially low-rise housing and branded residences. Good absorption rates were driven by local and overseas purchasers.
The second phase from 2019 to 2020, saw new supply first limited by tightened financial policies, and then in early 2020 by pandemic effects. In the second half of last year, absorption of 25% was down -7% compared to 2019, affected by extremely high job losses, increasing buyer caution, and low primary supply. Housing demand and sales were immediately slowed down. Most of the sales were driven by domestic market, especially affordable apartments. Developers started to focus on suburban areas and neighboring provinces because they recognized the advantages of these areas such as low prices and increasing growth of infrastructure. In 2020 sales were down -43% year-on-year to their lowest level in 5 years. Most sales were in the first and fourth quarter of 2020. Projects struggled with attracting overseas and expat sales under closed borders and pandemic effects resulting in growing uncertainty around the world.
Assessing market movements in early 2021, Mr. Them said: “We expect the housing market to recover this year, but the level of recovery is dependent on multiple factors. New projects launched in 2019 and 2020 were below previous years. Legal barriers in construction and project planning are being gradually removed along with the fact that there is a shortage of primary supply in several markets, which leads the government to come up with solutions to remove in 2020. After Congress, development procedures are expected to be speeded up which will enable more steady supply to market. In general, it will be difficult to have considerable changes in the apartment market”.
Mr. Them added: “The synchronous recovery of all business lines across the country will solve the problem of employment, income, and quality of life of the people, from that, improve housing demand. The Party Congress is expected to "untie" many administrative activities that license projects.”
Notably, evaluating the current development trend of megacity projects, Mr. Matthew Powell, Director of Savills Hanoi, said: “In the current trend of developing megacities, Savills witnesses that developers gradually pay more attention to the overall development plan with a well-planned strategy for local utilities and services, with a variety of residential and commercial products such as schools, hospitals, shopping centres, etc. The purpose of them to create a fully equipped living environment for the residential community. Currently, the market has paid more attention to the “green” factors such as health, living environment, air quality, and convenience of transportation. Therefore, investors need to create a different living environment to make the projects more attractive.