Apartment condominiums in Hanoi have been continuously setting new price records in recent years. As of the first quarter of 2024, the average price reached 59 million VND/m2, increasing for 21 consecutive quarters.
According to Mr. Le Xuan Nghia, a member of the National Monetary Policy Advisory Council, the Hanoi condominium market is experiencing an imbalance between supply and demand, posing a risk of a “bubble”.
Citing the fact that many projects in Hanoi have recorded strong increases, with some projects increasing by more than 30%, with prices reaching over 100 million VND/m2, Mr. Nghia said that this is an issue that needs to be warned against, otherwise the condominium segment will sooner or later become uncontrollable.
“ I have warned that the condominium segment is starting to show signs of a “bubble” and it may not be long before it becomes a reality. One day, when the supply runs out but the demand continues to increase, the supply and demand curves will run parallel, failing to meet. Moreover, there is a situation where people have houses and are able to sell them, but they think the prices will continue to rise, so they hold on to them and do not sell, while demand continues to increase ”, said Mr. Nghia.
In recent times, prices of condominiums in Hanoi have been continuously increasing. (Illustrative photo: Minh Duc)
Mr. Vu Cuong Quyet – General Director of Dat Xanh North – also analyzed: In the fourth quarter of 2023, prices of condominium projects in Hanoi increased by 5-7%. Subsequently, in the first quarter of 2024, condominium prices increased by another 6-8%. In the last two quarters alone, the condominium market in Hanoi has increased by 10-12%.
” This is a strange phenomenon when condominium prices in Hanoi are driven up while the real estate market is declining “, Mr. Quyet emphasized.
According to Mr. Quyet, condominiums increasing too much will exceed the purchasing power of people and attract speculators. After a while, investors and speculators will cut their losses, leading to risks for the market.
A condominium “bubble” will form when prices increase excessively compared to its real value. This phenomenon originates from a sudden increase in the demand to buy land and houses while supply is still limited. When they see an opportunity, speculators massively pour money into the market to make a profit, pushing up demand even higher.
The bubble only stops when it bursts. That is when demand declines or stagnates, causing the prices of these assets to plummet miserably while the market collapses rapidly.
Sharing a similar view, economic expert, Assoc. Prof. Dr. Dinh Trong Thinh also commented that the prices of condominiums in Hanoi have recently been rising rapidly by 30-40%, and many investors who are preparing to launch products are also planning to increase the selling prices. He warned that this will worsen the housing crisis that is taking place in the market.
Mr. Thinh recommended that management agencies thoroughly remove legal bottlenecks, increase the number of products on the market, and intensify competition. “ Social housing and low-cost housing are important solutions to change the current crisis ”, said Mr. Thinh.
According to Ms. Do Thu Hang, Senior Director, Research and Consulting Department, Savills Hanoi, there are currently small fevers in the apartment segment.
According to Ms. Hang, the supply of condominiums continues to be scarce. In the first quarter, the primary supply in the entire market reached 12,928 units, increasing by 9% on a quarterly basis but decreasing by 34% on a yearly basis. While the supply of apartments has remained low for a long period, on the demand side, in addition to the repressed demand of people to buy houses that has been accumulated for a long time, the market has also welcomed a new demand from investors.
Recently, the Ministry of Construction requested the Hanoi City People’s Committee to inspect and audit real estate trading activities, especially condominiums that show signs of abnormal price increases.
Through that, measures will be taken to rectify and handle acts of inflating prices, jacking up prices, speculation, and other violations of real estate trading laws (if any).
” The Ministry of Construction requests that the Hanoi City People’s Committee focus on effectively directing the above contents and submit a report to the Ministry of Construction before April 20 “, the document stated.
According to the Ministry of Construction, the real estate market has shown signs of recovery. However, in recent times, the press has reported that in some areas, projects, and condominium complexes, apartments and houses have abnormally high prices; there are phenomena of inflating prices, jacking up prices, and speculation.
