(Bloomberg) -- Ho Chi Minh City’s first-quarter condominium sales fell 23% to a record low due to high interest rates and as funding constraints faced by many developers limited supply.

Firms sold 960 new apartments versus 1,247 a year earlier, marking a third straight quarter of decline, data from consultancy CBRE Vietnam showed. That compares to a three-year high of 11,259 units sold in the second quarter of last year and the five-year quarterly average of 6,000 units. The quarterly sales were the lowest since 2003 when CBRE started recording the data.

Vietnam’s real estate sector has been hit since the last half of 2022 amid arrests of high-profile executives, a struggling bond issuance market, inflation and rising mortgage rates. The housing sector’s slowdown weighed on growth, which decelerated in the first quarter.

“The market continues to face many headwinds in 2023,” said Duong Thuy Dung, executive director of CBRE Vietnam. 

Homebuyers in Vietnam’s financial hub are holding back, waiting for interest rates to further decline and government to offer more incentives, CBRE said.

In the capital city of Hanoi, purchases of condominiums dropped to 2,045 units, less than half of the quarterly average over five years. However, the market saw the return of some foreign buyers, including from Hong Kong and Singapore.

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