The Savills Blog

Residential Transactions – The Post Pandemic Picture

In many countries, as residential prices increase, so have transaction volumes. While some cities, like Miami and Singapore, have managed to return to (or exceed) pre-pandemic transaction levels, not all cities have bounced back quite as quickly.


Trends in residential property transactions

The pandemic has caused enormous shifts in global real estate. With some countries emerging from behind the Covid-19 cloud, global real estate investment underwent a major shift in the first half of 2021 as the multi-family residential sector overtook offices to become the largest global sector. In H1/2021, US$136 billion was invested in residential real estate, increasing 35% year-on-year (YoY).

Ông Vincent Nguyễn

Globally, many buyers found that their homes no longer suited their needs due to the shift to hybrid working. This resulted in increased sales when buyers needed new properties to suit their changing needs. However, Viet Nam has not yet seen the same rapid shift to hybrid working, as homes are smaller, the commuting time relatively short and its workforce still wants physical office space for social connection and collaboration.

While many countries saw transaction volumes increase in H1/2021, Viet Nam’s residential sales decreased. For example, the number of villa and townhouse sales Q2/2021 decreased by -33% YoY in Ho Chi Minh City. Buyer caution during the pandemic, limited new supply, and expensive remaining stock can account for the reduced transactions. Limited new supply is exacerbated by delayed launches and some projects facing unresolved legal issues.

Many cities, including Ho Chi Minh City, have supply shortages and cannot meet the demands. Mr Vincent Nguyen, Director of Savills Residential HCMC, commented: “In Q2/2021, villa and townhouse primary supply in Ho Chi Minh City remained low. Limited new supply and low inventory resulted in price increases. However, as decentralisation continues to the suburban districts that have large land banks, supply issues can be stabilised in the future.”

Cities in focus

Asia Pacific cities

In H1/2021, primary villa and townhouse transactions in Ho Chi Minh City decreased by -51% YoY. Tokyo also saw H1/2021 transaction volumes decrease by -24% compared to 2019. Despite fewer sales, absorption in Ho Chi Minh City remained high at 65 percent. The decrease in sales were due to limited new supply, which has pushed up prices, and expensive remaining stock – some of which is asking over US$2 million.  Demand remains for landed property. Mr Vincent Nguyen added, “This segment continues to receive investment, and absorption is good thanks to limited alternative investments and good product quality.”

Chinese and Singaporean cities saw decreased transaction volumes in the first half of 2020 but have returned to pre-pandemic volumes in H1/2021. For years, residential property has been considered the safest investment in China. However, with China’s property giant, Evergrande, facing collapse, the Chinese property market may slow substantially in the next few months.

Global cities

Cities in the US experienced very low transaction volumes between March and June 2020. However, transactions surpassed pre-pandemic levels in September 2020 and have stayed high. San Francisco saw the biggest declines, with transactions decreasing 57% in May 2020 as many tech workers left the city. It saw a return to pre-pandemic volumes in July 2020 and has even seen elevated levels since. Transactions and prices have boomed in Miami due to a surge in domestic migration. Transaction volumes in H1/2021 were 34% higher compared to the same period in 2019. 

European cities have returned slowly to pre-pandemic transaction volumes. Transactions in Paris remain low, and Madrid only returned to pre-pandemic levels in March 2021. In Q2/2021, London recorded high sales as buyers rushed to complete purchases before the end of the Stamp Duty holiday. 

Where are transactions headed?

In the mid-term, economies will continue to return to normal and transactions in global cities are expected to increase as travel restrictions are lifted. Cities will continue to be the centre of work, living, and play – as such, demand will keep on rising. 

Mr Vincent Nguyen suggested developers should be proactive and plan their post-pandemic strategies. He said, “Transactions will be challenged by the pandemic for the rest of the year. However, there are opportunities for developers to use this time to create dynamic solutions and strategies that will help them return to pre-pandemic sales levels.”

Recommended articles