Buying Condominiums Fueled by FOMO
Driven by FOMO (fear of missing out), Hanoi’s condominium market has witnessed an unprecedented price hike since the beginning of this year. According to CBRE, the influx of premium segment supply has inflated the average primary condominium price in Hanoi to VND 56 million per square meter (excluding VAT and maintenance fees), marking a 5% quarterly and 19% annual increase.
In the secondary market, Hanoi’s condominium prices experienced their most significant year-over-year growth in history during the first quarter, climbing by 17% to an average of over VND 36 million per square meter. This robust growth was evident in nearly every district in Hanoi, especially in the western suburbs where there is a large supply and a high population density.
Amidst this “meteoric” price surge, many prospective condominium buyers feel the pressure to act quickly. As a result, the proportion of customers making transactions immediately after viewing properties has increased significantly compared to 2023 due to the “fear of price hikes.” Buyers are increasingly compelled to make hasty decisions.
The “fear of price hikes” has been fueled by the rapid increase in Hanoi’s condominium prices since the start of the year. The market is experiencing mini-surges, with prices fluctuating on a daily basis, resulting in significant price changes from one day to the next.
This situation was corroborated by Ms. Do Thu Hang, Senior Director, Research and Consultancy Department, Savills Hanoi, during a press conference held in the first quarter of 2024. Ms. Hang observed that prospective buyers are purchasing properties more quickly than ever before. Previously, buyers would thoroughly research and deliberate before committing to such a significant investment. However, lately, more and more buyers are making quick decisions, “depositing for a unit on the same day as viewing it.”
In addition to the pent-up demand and limited supply, Ms. Hang attributed the urgent desire to buy condominiums to FOMO, the fear that prices will continue to rise and become unaffordable.
Prospective buyers are concerned and eager to close deals due to the continuous increase in Hanoi’s condominium prices on both primary and secondary markets. Savills reports that new condominium prices have reached an average of VND 59 million per square meter, representing a 14% annual increase.
Real Estate Agents Leverage Psychological Tactics
Recognizing buyers’ psychological vulnerabilities, unscrupulous real estate agents often employ psychological tactics such as “buy quickly before the price increases,” “multiple parties are interested,” and “this unit will be gone by this afternoon” to pressure buyers into making hasty deposits.
Real estate agents showing clients a property at night. (Photo: LP)
Ms. Hang (38, Hanoi) shared her experience of searching for a home over the past month. She had been exploring two completed and occupied projects near the third ring road. She worked with different agents for each project. For Project 1, the agent informed her of two available units priced at VND 7.4 billion and VND 7.8 billion. For Project 2, another agent mentioned a unit priced at VND 7.2 billion.
“All was well until two more agents appeared. One named Quynh contacted me, and my father found another named Ha,” Ms. Hang said.
Agent Quynh informed Ms. Hang that she had three units available in the two projects she was interested in. The details, including the floor numbers and unit images, provided by Quynh matched those given by the first two agents she had worked with.
“Quynh told me that one unit was sold at 9pm, one at 5pm the same day, and the remaining one at 8am the following day,” Ms. Hang recalled.
According to Quynh, all the units were selling out quickly, with little to no inventory left.
However, Ms. Hang independently verified that all three units were still available, even after being listed for nearly two months without finding buyers. “None of the units had been sold; they were still available. I couldn’t believe that they were selling out like hotcakes, as the agents had told me. It felt like buying groceries, with units being ‘sold out’ within hours,” Ms. Hang said.
Ms. Hang encountered a similar situation with agent Ha, who showed her two units in a different project. She and her father liked the units, but they were priced too high per square meter, so they decided against purchasing them.
“After we left, Ha informed us that both units had been sold due to deposits. Then, three days later, Ha said that the deposits had been canceled due to disputes over fees. She urged us to make a decision quickly before the prices increased or we would lose them to other buyers,” Ms. Hang said.
Tran Lam, a condominium agent from a reputable real estate firm in Hanoi, explained that Ms. Hang’s situation is not uncommon; many prospective buyers have similar experiences. Agents often create a sense of urgency, emphasizing the need to act quickly before prices rise or the units are sold. However, not everyone has the experience or diligence to verify the information independently, especially first-time buyers. If they panic and believe the agents’ claims, they may make impulsive purchases. Therefore, unscrupulous agents continue to employ this basic tactic frequently.
Caution Advised for Prospective Homebuyers
In light of the escalating prices, with some projects selling for more than their actual value, Ms. Do Thu Hang, Senior Director of the Research and Consultancy Department at Savills Hanoi, advises prospective buyers to carefully consider the usability and affordability of the properties.
“If prices continue to rise, buyers will have to reassess their financial situation. While the primary demand remains for residential purposes, if prices continue to rise, buyers may consider renting condominiums in the inner-city or relocating to the surrounding provinces of Hanoi where prices are more reasonable,” Ms. Hang said.
Ms. Do Thu Hang, Senior Director of the Research and Consultancy Department at Savills Hanoi
For buyers seeking homes for personal use, Ms. Hang suggests considering properties in nearby provinces such as Hung Yen or Bac Ninh, or in the vicinity of the fourth or fifth ring roads, due to the expanding infrastructure. Infrastructure development connects suburban areas to the city center, reducing travel times.
“Developers can acquire land in nearby provinces or suburban areas at a lower cost, creating more affordable housing options,” Ms. Hang said.
Moreover, property offerings in neighboring provinces are increasingly meeting Hanoi’s housing needs. Hung Yen and Bac Ninh are expected to supply approximately 203,000 apartments between 2024 and 2026.
“The amendments to the law are expected to stimulate the real estate market and improve the supply to some extent. From 2025 onwards, the market will receive around 84,400 apartments from 101 new projects,” she said.
