Apartment prices in HCMC averaged $2,067 per square meter in the third quarter of this year, up 23.8 percent year-on-year, according to a market report released Thursday by real estate firm JLL Vietnam.

Prices of high-end apartments reached a new historical high at $5,320 per square meter, up 64.9 percent year-on-year, driven by high prices set on new launches as supply remained generally limited due to lengthy sale approval procedures with local authorities, the report said.

For ready-built property (RBP) including villas and terraced houses, average prices on the primary market reached $4,689 per square meter in the third quarter, up 20.2 percent year-on-year, while prices in the low and mid end segments rose 16 percent.

Demand was particularly strong in the terraced house segment of units priced between $170,000–$250,000 per unit, which mainly came from owner-occupiers and capital gains investors.

New supply of RBP by the end of this year is expected to remain limited, reaching just over 2,000, half that of 2018, also because of slow procedures, while some demand will shift from investors in the high-end apartment segments, the report said.

According to JLL, these investors, the main demand source for high-end apartments, have already begun shifting their investment to RBPs to enjoy better capital gains, given that the cost to acquire high-end apartments have now reached a new high, making the investment less attractive.

In 2015 the average price of a high-end apartment was VND40 million ($1,720) per square meter. It had risen to VND61 million ($2,630) by August, and would continue to increase in the coming months, the firm said.

The average price of a mid-range apartment rose from VND21 million ($900) to VND32 million ($1,380) between 2015 and August 2019, a 52.4 percent increase. But the gain has been slow this year.

In the affordable segment, prices have increased from VND16 million ($690) to VND24 million ($1,030), a 50 percent rise. In the last 12 months they have risen by 9 percent.

Prices are expected to keep rising due to a short supply since projects are taking a lot of time to complete legal procedures even as demand remains strong given the high net migration to the city, DKRA said.

According to real estate firm Savills, total supply, which includes unsold units and newly built units in the city in the last quarter of 2018, fell 44 percent year-on-year.

This number fell by a further 34 percent in the first quarter of 2019 to just over 12,000 apartments, which represents a 57 percent drop compared to the first quarter of 2018. One of the problems the city market faces is the legal difficulty in selling apartments, Le Hoang Chau, chairman of HCMC Real Estate Association, said.

Many projects are stuck at various levels from applying for approval from local authorities and getting permission to begin construction to getting permission to begin selling.

According to the city Department of Statistics, Saigon’s base population at the end of 2018 was 8.85 million people.