According to market research reports, condominium apartments in Hanoi have continuously set new price levels in recent years. As of the first quarter of 2024, the average price of new condominiums had reached 59 million VND/m2, marking 21 consecutive quarters of growth. The selling price in Hanoi’s secondary condo market in Q1 recorded its highest annual increase ever, rising 17% year-over-year to an average of over 36 million VND/m2.
Particularly, after the Housing Law adjusted regulations on the usage period of condominiums, 50-year apartments in the Hanoi market have unexpectedly become sought-after due to their lower prices, which meet the needs of customers. It has been observed in the market that most 50-year apartments have a selling price that is 20% lower than that of freehold apartments in the same area and segment.
In response to this situation, the Government and the Ministry of Construction have actively intervened with several key solutions to gradually develop a healthy and stable real estate market.
Assoc. Prof. Dr. Vu Dinh Anh – Financial Expert, Former Deputy Director of the Institute for Price Market Research (Ministry of Finance).
Analyzing the impact of monetary policy on Vietnam’s real estate market, Assoc. Prof. Dr. Vu Dinh Anh – a financial expert – stated that there are two policies with direct impacts: credit policy and interest rate policy.
Regarding credit policy, Mr. Anh stated that Vietnamese credit in 2007 once grew by 53.4% within one year, which directly triggered 23% inflation in 2008. Subsequently, inflation remained above 10% in 2011 and its severe consequences are still being felt today, impacting those interested in real estate. In 2023, the credit situation took a contrasting turn when up until November 2023, credit had yet to reach 10%, despite the target being set at 14-15%. And so far, the supply of credit has not been able to reach the economy.
However, real estate credit for 2024 is showing positive signs and is expected to grow well because commercial banks have recently organized general shareholder meetings and have all expressed their intention to promote credit for real estate. Therefore, even though the general credit supply is having difficulty reaching the economy, real estate credit will still be abundant and quite favorable, Mr. Anh stated.
With regard to interest rate policy, Mr. Anh believes that at present, when savings interest rates are decreasing, it is an extremely advantageous time for the real estate market because people tend to massively withdraw their savings deposits and switch to buying real estate. This is also one of the reasons for the recent surge in condominium prices, with this momentum even being seen in unfinished condominium projects that have quickly sold out.
On the other hand, not only has the mobilization interest rate fallen, but when the lending interest rate is also reduced, it is also beneficial for real estate buyers who wish to use bank loans. Thus, both the input and output are creating very favorable conditions for the real estate market.
He cited statistics indicating that up to 80% of existing condominiums are purchased for the purpose of renting them out to capitalize on their cash flow. These buyers are typically people who have borrowed money, using financial leverage to purchase the condominium, and then rent it out rather than using it to meet their own accommodation needs.
Notably, the economic expert also introduced a new variable, which is buying old apartments that are slated to be demolished with the intention of profiting from them after they have been rebuilt. He emphasized that this variable is extremely significant because it will lead to major changes.
These old condominiums located in Hanoi, he said, are no longer just “gold or diamonds” but “super gold, super diamonds” because they have always occupied choice locations, much more so than newly built condominiums, Mr. Anh stated.
Expressing a similar view to Mr. Anh, Mr. Nguyen Van Dinh – Chairman of VARS – said that the situation of continuously decreasing bank interest rates but still low credit growth rates indicates that the current policies are not suitable.
“We need to design plans to promote more balanced capital development. In addition, social housing could be developed with a focus on renting it out in order to better absorb credit,” Mr. Dinh suggested.
