The Vietnam Real Estate Brokers Association’s real estate market report reveals notable insights into the rising prices of real estate properties. In the second quarter, primary residential property prices continued their upward trajectory, with most new developments being completed to a higher standard. Some mid-range apartment projects also witnessed price hikes of 3-5% due to the dwindling supply in this segment.
According to the Association’s data, apartment prices in Hanoi, Ho Chi Minh City, and Danang during Q2/2024 surged by 58%, 27%, and 45%, respectively, compared to 2019.
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A survey of the market also reveals that apartment prices are indeed on the rise. Mr. Nguyen Duy Tri, a resident of Dong Da, Hanoi, shared that he profited VND 200 million within a few months of investing in an apartment. In December 2023, Mr. Tri purchased an apartment in Linh Dam (Hoang Mai, Hanoi) with the intention of “riding the market wave.” At the time of purchase, the price of the 60m2 apartment was VND 2.3 billion. However, by May 2024, brokers were offering to buy his apartment for VND 2.5 billion, and now they are willing to pay VND 2.6 billion.
At the seminar “Investment Focus in the New Context,” Mr. Dang Truong Giang, Deputy General Director of Mai Viet Land, shared: “From 2014 to the present, the value of apartments has continuously increased rapidly. According to CBRE, apartment prices increase by 13-15% annually. Until now, the apartment segment has shown no signs of cooling down.”
According to Mr. Giang, to determine if the current situation of rising apartment prices is abnormal, we must consider multiple factors. Typically, bubbles form due to supply and demand dynamics, with investment demand outpacing actual housing needs, price factors, monetary policies, and capital sources.
In reality, according to a survey by batdongsan.com.vn, the supply of apartments is extremely limited. For example, in Hanoi, despite continuous increases in supply, it still fails to keep up with the demands of its residents. In other words, I believe that the shortage of supply is a key reason for the rising apartment prices, which is not necessarily abnormal. Accompanying the price increases, the demand for real estate purchases has also grown significantly, with total searches increasing by more than 10%.
According to Mr. Nguyen Dung Minh, Deputy General Director of MIKGroup, in the coming time, I expect new laws to create opportunities for large investors with large-scale projects that bring real value to society. In the past five years, large-scale projects such as Vinhomes Smart City, Ocean, and Ecopark have created significant added value. For instance, Smart City Tay Mo, which was priced at around VND 30 million/m2 four years ago, now commands prices of VND 80-90 million/m2. This does not indicate an overheated market but demonstrates the value created by well-invested, well-planned, and well-infrastructured projects.
Mr. Minh attributed the short-term issue of limited supply as one of the factors influencing the selling price. From now until the end of the year and the beginning of next year, the average selling price is expected to climb even higher.
