Apartment Prices Stop Soaring
Ms. Ngọc M. (Long Biên, Hanoi) has been trying to sell her apartment for a month now, but she hasn’t found a buyer yet. Ms. M. admitted that liquidity is challenging, and there are hardly any potential buyers. Although, at the beginning of the year, brokers reported that the apartment’s price was increasing weekly.
“At the end of 2023, I received a deposit to sell the apartment for 2.3 billion VND, but due to procedural issues, the transaction could not be completed. At the end of February, I was informed by a broker that the apartment had been sold for 2.7 billion VND. A week later, the broker notified me that another buyer was willing to pay nearly 2.9 billion VND. Now, when I want to sell the apartment, I’ve advertised it for 2.9 billion VND, but there have been hardly any inquiries for a month,” Ms. M. said.
Ms. M. shared that her family is considering lowering the price to expedite the sale.
Observations of the Hanoi apartment market show that listed prices have been decreasing in recent weeks.
Mr. Đăng Duy (Cầu Giấy, Hanoi) said that before the holiday on April 30 and May 1, his family inquired about a three-bedroom apartment in the Mỹ Đình area, which a broker quoted at 5.3 billion VND. However, they didn’t finalize the deal as they felt the price was still high. This week, the broker informed them that the price had dropped to 5.1 billion VND.
Similarly, an apartment in Nguyễn Xiển, which was advertised for 2.8 billion VND at the end of last year, saw its price increase to 3.8 billion VND at the beginning of 2024. Now, brokers quote its price at around 3.4 billion VND.
Hanoi apartment listing prices are decreasing after a period of rapid increases. Photo: Minh Hoàng |
“After nearly two months of searching for an apartment, I’ve noticed that the market has calmed down compared to the beginning of the year. Listing prices are starting to drop, with many apartments reducing their asking price by 100-200 million VND. My family has decided to postpone our purchase for now to observe the market and wait for it to cool down,” said Mr. Duy.
The director of a real estate agency in Hà Đông (Hanoi) stated that since the second half of April, apartment transactions have slowed down. In some long-completed projects, transactions in April decreased significantly, halving compared to the previous two months.
“Due to the high demand for real housing and limited supply, apartment prices have surged recently. When supply is constrained, sellers have the upper hand in setting prices. After this rapid price increase, sellers are now adjusting their expectations. I believe that Hanoi apartment prices will correct but not significantly. In the short term, the affordable and mid-range segments may continue to rise due to strong demand. In the near future, when new laws take effect, many projects may be unblocked, increasing supply in the market. As supply increases, apartment prices will decrease and stabilize,” he said.
People’s purchasing power lags far behind housing prices
Data from the Ministry of Finance’s report on the implementation of policies and laws on managing the real estate market and developing social housing from 2015 to the end of 2023, submitted to the National Assembly’s Economic Committee, shows that personal income tax (PIT) revenue from real estate transfers increased year-over-year from 2017 to 2022.
However, in 2023, PIT revenue from real estate transfers decreased significantly.
Housing prices have continuously risen beyond the financial reach of most people, leading to a decrease in transactions and PIT revenue from real estate transfers in 2023. Chart: Hồng Khanh
According to the Ministry of Finance, this is due to the real estate market’s difficulties, declining purchasing power and liquidity, limited funding, and an inadequate supply of affordable housing. Additionally, housing prices have risen beyond most people’s financial capabilities, leading to a reduction in market transactions and, consequently, PIT revenue from real estate transfers.
Mr. Hoàng Hải, Director of the Housing and Real Estate Market Management Department (Ministry of Construction), acknowledged that the prolonged shortage of supply has pushed real estate prices, including apartments, to increase.
Some apartment projects that have been in use for 5-10 years, and even old collective apartments, have seen significant price increases. Apartment prices in Hanoi rose by about 38% at the beginning of 2024 compared to 2019.
However, Mr. Hai noted that apartments with sudden price increases rarely have transactions and almost no sales.
While asking prices for real estate in most segments have risen in recent months, actual transactions at some notary offices in Hanoi have not increased significantly.
Over the past five months, land use right registration (including apartment and land transactions) in the city has remained stable, without significant growth. Chart: Hồng Khanh
According to the Hanoi Land Registration Office, the number of transactions at the central transaction file assurance office increased by over 60%. Specifically, in March 2023, there were 3,317 dossiers, while in March 2024, there were 5,049. In contrast, the number of registration dossiers did not increase. In March 2023, there were 5,050 dossiers, compared to 3,112 in March 2024.
Hồng Khanh
