New benchmark price for apartments
In early 2023, a study on the real estate market by NetCredit in the US revealed that Hanoi is among the top 10 capitals in the world with the highest house prices compared to the average income of its residents.
By early 2024, according to the latest study by NetCredit, Hanoi continues to be in the group of capitals where buying a house is most difficult in the world. The price of an apartment in Hanoi’s inner city has increased by 77% in the past year, equivalent to 45 years of average income for workers.
Meanwhile, the latest statistics from Savills show that the price of apartments in Hanoi recorded at the end of 2023 ranged from 51 to 70 million VND/m2 – setting a new benchmark price, accounting for 63% of new supply, an increase of 24% compared to the same period in 2022. Apartments in this price range accounted for 49% of the total number of units sold.
New apartments in Hanoi are priced from 51 to 70 million VND/m2, setting a new benchmark price.
Apartments with prices above 4 billion VND accounted for 42% of the total number of units sold in 2023, up from 3% in 2019. Apartments priced from 2 to 4 billion VND accounted for 55% of market share. Only 3% of units were priced below 2 billion VND.
According to Savills, the new supply of apartments at the end of the year increased by 52% compared to Q3/2023 but decreased by 1% compared to the same period, with 2,876 units recorded. Primary supply reached 11,911 units, down 40% quarterly and 41% annually. However, the new supply recorded in the quarter only reached 10,403 units, with Grade B accounting for 84% of the supply.
Although most developers did not change prices, low inventory of high-priced low-rise units led to an increase in primary prices.
For the low-rise segment, in 2023, the total new supply reached 272 units, down 82% annually. The new supply included 87 units, including 58 units from the new Solasta Mansion project in Ha Dong and 29 units from the existing An Lac Green Symphony project in Hoai Duc. Primary supply reached 710 units from 16 projects, down 2% quarterly and 23% annually. Townhouses are the main product with a market share of 44%.
Although most developers did not change prices, low inventory of high-priced low-rise units led to an increase in primary prices. For example, the primary villa price increased by 55% quarterly to 160 million VND/m2 of land, mainly due to the sale of low-priced units in Me Linh in Q3/2023. The townhouse price increased by 3% quarterly to 194 million VND/m2 of land. The shophouse price also increased by 3% quarterly to 328 million VND/m2 of land.
Waiting for reasonably priced supply in the suburbs of Hanoi
According to Ms. Do Thu Hang, Senior Director of Research & Consultancy at Savills Hanoi, the increase in housing prices in the residential segment is due to the increase in land and construction costs, infrastructure development and improvement in quality. The restriction on supply in the market still continues, leading to the continued high average primary prices across the market.
Savills representatives believe that current buyers still have concerns. In fact, the number of apartments sold in the last three months of 2023 mainly came from projects with reputable developers, ensuring legal compliance and completing financial obligations. Therefore, despite being supported by lower interest rates for housing loans, buyers still have certain concerns regarding legal factors.
Furthermore, banks also have concerns about developers not fulfilling legal obligations with projects to complete the borrowing process. This invisibly affects the buyers’ decisions and the number of houses sold, while also explaining the fact that although interest rates have decreased, the absorption rate is still not high.
Infrastructure development will drive the demand for housing to the provinces and neighboring areas of Hanoi with reasonable prices and larger land funds.
According to Ms. Hang, in the context of limited supply and high primary prices, homebuyers can expect new supply from infrastructure development. Infrastructure investment projects such as Belt Road 3.5 and 4 will expand the housing market in Hanoi, aiming to decentralize the demand from inner city and central areas. Infrastructure development will drive the demand for housing to the provinces and neighboring areas with reasonable prices and larger land funds.
The Savills report also states that this is a positive point for the supply source, as residential products in outlying areas and neighboring provinces will continue to increase, meeting the housing needs of Hanoi.
Specifically, in 2024, the market is expected to receive an additional 12,100 new apartments, with 87% of market share in Hoang Mai, Nam Tu Liem and Ha Dong districts. Hung Yen and Bac Ninh will provide about 203,000 apartments from 2024 to 2026. By 2026, the low-rise segment is expected to have 14,000 new units from 37 projects.
In addition, the passage of the amended Housing Law, the amended Real Estate Business Law, and most recently the amended Land Law is expected to have a positive impact on the market.
