One of our customers in Hanoi recently asked: In Hanoi, the apartment market is booming, with some areas reaching new price highs almost every month. Some people want to sell their current apartment and buy a new one, but the higher prices prevent them from finding a suitable replacement. Others have sold their apartments and quickly bought new ones elsewhere, resulting in losses of several hundred million. So, is this a good time to sell an apartment or not? When should you sell and when should you not sell?
According to Le Quoc Kien, an advisor to a group of first-time home buyers, investors are mainly focused on the opportunity to make a profit and the potential for price increases. In some cases, the actual purchase price does not matter as much compared to the current market price. Investors only need to believe that “the price will increase by how much” before investing. In the past three years, with many legal issues leading to financial losses, investors have started paying more attention to this matter.
Homebuyers have different priorities. They are still concerned about the purchase price compared to the current market and the legal status of the property, but these are not the deciding factors. They also consider the living environment and the quality of life they will experience in the long term, such as convenience to work, school, proximity to family and relatives, community reputation, essential amenities, etc. In addition, they also consider their emotional response when viewing a property, the construction quality, and whether the design, layout, and colors are suitable.
For those who are looking to make a profit by selling their apartments, it is not a top priority for homebuyers unless they have a genuine need to change their living environment. For example, they may want to switch from an apartment to a ground-floor house (a small one in the city or a larger one in the suburbs), or they may want to switch to another apartment that offers a more suitable living environment, or they may wish to change their location, etc. Especially for those who are currently living in an apartment, if they want to buy a new one, they will need to consider carefully. This means they need to find another apartment with a suitable location, price, and living environment before deciding to sell their current one.
Photo: Ha Vy
Therefore, according to Mr. Kien, those who are looking to change their living environment can seize the opportunity to sell their apartments and buy a new one. However, if they are satisfied with their current living environment, they do not need to go through the hassle of selling their homes only to buy new ones at higher prices. Or, if they want to both make a profit and maintain their current living environment, they need to list their current apartment for sale and start looking for a new one simultaneously. Of course, it is not easy to manage the financial aspect of selling and buying at the same time. It requires a lot of knowledge and experience in the real estate field and is not suitable for beginners.
It is worth noting that the constant establishment of new price levels for apartments in recent years has allowed many apartment owners to make significant profits in a short period, whether for investment purposes or for personal residence.
Data from the Vietnam Real Estate Brokers Association (VARS) also shows that on average, apartment prices have been growing by double digits each year. In 2023, the price index for apartments in Hanoi had increased by 16 percentage points compared to the beginning of the year.
Apartment owners can not only profit from selling their apartments but also consider renting them out for monthly income. Currently, most new properties entering the market have prices above 40 million dong per square meter, with almost no affordable housing projects available. On the other hand, the majority of current demand comes from people looking for affordable housing.
The establishment of new price levels for apartment projects also leads to continuous rent increases for both old and new apartments in residential areas. According to VARS, rental prices for apartments in Hanoi have been increasing significantly in recent years, especially for studio apartments (1-bedroom units), which offer higher profit rates compared to larger units.
Similarly, in Ho Chi Minh City, rental prices for apartments have also begun to show a slight upward trend, especially in the inner city area, with prices ranging from 500 thousand to 1 million dong per month. Despite the stagnation in rental prices in the middle of 2023, and even a slight decrease in some larger apartments due to a surge in rental prices following the end of the pandemic.
According to VARS, rental demand is expected to continue to increase due to a large number of foreign experts coming to Vietnam through FDI-funded projects. This trend is happening when there are significant changes in consumer behavior. With the Millennial-Z generation, which makes up 47% of the Vietnamese population, placing a greater emphasis on lifestyle, living environment, and utility systems to improve their quality of life. They mainly choose to live in fully-equipped apartments with better living environments – something that cannot be achieved at an equivalent price with landed properties. Renting is a priority choice for this generation.
