Low supply was another factor, with only 470 landed properties placed on sale, the lowest in the last five years and representing a 50 percent fall from the previous quarter and 59 percent year-on-year, property consultancy Savills Vietnam said in a note.

The absorption rate was 43 percent, 25 percentage points down from the previous quarter.

But the note said sales are likely to increase in the remaining months of the year since the limited supply means the inventory would be sold to affluent customers.

New low-rise projects will be primarily be in districts 7, 9, 12, Binh Tan, and the suburban districts of Binh Chanh, Nha Be, Can Gio, Cu Chi, and Hoc Mon, where land is still not scarce and infrastructure improvements are imminent, according to Savills.

By 2023, nearly 9,200 new dwellings are expected to be built, 25 percent of it in Binh Chanh, 18 percent in District 9 and 17 percent in District 12.

A survey by VnExpress found that the slump in sales was also due to the competition from neighboring provinces, where prices are could be fraction of those in HCMC.

A villa or townhouse in the city currently costs $434,000-1 million while similar products in Dong Nai, Long An, Binh Duong, and Ba Ria – Vung Tau cost $151,000-260,000.

The improvement in transportation also gives these contenders a boost.