HCM City (VNA)♚ – Townhouse and villa transactions in Ho Chi Minh City havefallen to the lowest in the last five years with their primary supply reachingonly 40% and a low absorption rate, according to real estate consultancy SavillsVietnam.

Moreover,most of the townhouses and villas are priced at over 30 billion VND (1.2million USD), exceeding the affordability of the majority of house buyers inthe city. According toSavills Vietnam, last year, the primary supply of townhouses and villas in HoChi Minh City saw a year-on-year decrease of 40% to 993 units, the lowest in the last five years. In addition,only 286 units were sold last year, marking a year-on-year reduction of 73% andthe absorption rate drop to 29%.  Explainingthe slowdown, Giang Huynh, associate director at Savills Vietnam, said that thecapital mobilisation process is still affected by the inspection of real estatebond issuance. In addition, the world’s economic and political developmentsleave heavy impacts on the domestic economy, causing the incomes and cash flow ofbusinesses and people to be blocked. On the otherhand, the scarcity of land funds in the inner city area of Ho Chi Minh City haspushed up house prices, leading to reduced affordability. Because of limitedsupply, investors gradually target the high-end housing segment, thus narrowingthe buyer pool and slowing the absorption rate significantly. She said thescarcity of land in the city has pushed up housing prices. According toits urban development plan, by 2030, the city will focus on high-risebuildings to optimise land plots and meet the large housing demand. This year1,400 of them will enter the market, with 65% being priced at VND20-30 billioneach, Savills has forecast. Housing demandtends to shift to neighbouring provinces. Specifically, Binh Duong will havemore than 3,400 new apartments, more than 90% of which cost less than 10billion VND. Dong Nai will have 2,900 new apartments, 41% of which are priced at5-10 billion VND and 29% priced at 10-20 billion VND. According toGiang, Dong Nai and Binh Duong have the advantage of developing low-rise housesto supply the Ho Chi Minh City market. When infrastructure is upgraded anddeveloped harmoniously, travel time from the provinces to Ho Chi Minh Citywill be cut, so housing prices become more reasonable and housing products aremore diverse, which helps make demand stronger. Seeing thattrend, in recent years, big investors have acquired land funds in thesesuburban markets to deploy large-scale projects. Besides, housing prices inneighbouring provinces are more competitive than those in Ho Chi Minh City. Theaverage primary selling price in Binh Duong and Dong Nai is just 16% and 22% ofthat in Ho Chi Minh City, Giang said. SavillsVietnam forecasts that the supply of townhouses in Ho Chi Minh City in 2026will reach nearly 5,500 units, equal to 78% of Binh Duong and 40% of Dong Nai. The largestfuture supply with 1,500 units will be in the suburban district of Binh Chanh,followed by Thu Duc city with 1,300 units and Nha Be district with 1,000units./.