Apartment Prices Surge Amidst Falling Transactions
At a recent press conference held by the Ministry of Construction, Director General Hoang Hai attributed the surge in apartment prices in certain locations to a shortage in supply. “The current product structure is imbalanced,” Hai stated. “There is a lack of affordable housing options while the market for luxury units remains robust.”
Hai cited a survey conducted by research organizations indicating that average apartment prices in Hanoi and Ho Chi Minh City ranged between 50 and 70 million VND per square meter.
Hoang Hai – Director General of the Real Estate Market Management Department, Ministry of Construction.
In Hanoi, apartment prices have witnessed a steady increase in both the primary market (direct sales from developers) and the secondary market (resales).
According to research firms, even apartments in projects completed 5-10 years ago and old high-rise apartments have experienced substantial price increases. The average price of apartments in Hanoi in early 2024 has risen approximately 38% compared to 2019.
However, apartment and detached housing transactions have declined, reaching only 81.51% of the volume recorded in the same period of 2023. This resulted in a mere 35,853 successful transactions.
Hai emphasized that addressing the market’s supply issues requires identifying and resolving five key bottlenecks related to regulations, capital, and information dissemination. The implementation of revised laws is expected to alleviate these constraints and boost supply.
Apartments Gain Appeal as Investment Vehicles
At a recent real estate forum, Dr. Tran Xuan Luong, Deputy Director of the Institute for Real Estate Market Research and Evaluation of Vietnam, observed that in the past, apartments were primarily utilized for residential purposes, with only about 15% being acquired for business and rental income. In contrast, in developed countries, apartment rentals are commonplace, generating passive income streams.
Luong highlighted how evolving consumer behavior has contributed to the sharpest price increases for apartments in the past two decades. The demand for apartments as residences, rental properties, and investment opportunities has surged. Investors recognize the potential for rental income and the extended property ownership period permitted by the 2023 Housing Law.
Furthermore, the perception of legal issues, certificate registration, and fire safety concerns associated with apartments has diminished. Consumers now appreciate the convenience and optimal locations offered by apartment living, making this market segment increasingly attractive.
Dr. Vu Dinh Anh, a financial expert and former Deputy Director of the Institute for Price Market Research (Ministry of Finance), concurred that the shift in homebuyer behavior has profoundly influenced investment decisions. “Apartments have become the preferred choice for savvy investors who can calculate the benefits and make informed decisions based on project and location,” Anh remarked.
