Southern apartment market transactions down 94% as investors wait on effects of law changes

The primary only added 625 new apartments mostly at nine existing projects, an 84% drop, according to a recent report by property consultancy DKRA Group.

Real estate firm Dat Xanh Services said the absorption rate in the south is 10-15 percentage points lower than in the north.

The few transactions there were took place at reputable projects offering reasonable prices and with legal procedures completed.

DKRA said the average apartment price in HCMC was VND42-57 million (US$1,670-2,270) per square meter in July, slightly down from a month ago after some luxury units were temporarily taken off the market.

Explaining the reasons for the sharp decline in trading, Vo Hong Thang, director of consulting and project development at DKRA, said prospective investors were cautiously observing the market and waiting for new laws to take effect in August.

Low supply, limited variety and the lack of promotions from developers also deterred them, he said, pointing out that some developers have postponed sales of new projects to gauge the impact of the new laws.

Dat Xanh Services expected supply to improve in the next few months as many developers gear up to launch new projects.

The prices of new units are expected to rise by 5-10% in HCMC and 2-3% in nearby provinces, it said.

The cautious mindset would likely persist in the near future as both buyers and sellers wait for notable market movements following the legal changes, it added.