Mr. Thanh Tung, an office worker in Hanoi, has just taken out a bank loan of 1 billion VND to purchase an apartment at HD Mon City on Nguyen Co Thach street, Nam Tu Liem district, Hanoi. The 54-square-meter apartment has two bedrooms. The total amount he spent was nearly 3.5 billion VND.
With a rather regretful sentiment, he recalled: “If I had decided to buy a few months earlier, I could have saved a few hundred million VND. Or even, if I had confirmed the purchase a year earlier, the amount I could have saved would have been up to a billion VND. Because at that time, apartments of the same size in this building were offered for sale by the owners for less than 2.5 billion VND.”
According to the Price History Tool of Batdongsan.com.vn for an apartment of the same size, the average selling price at Mon City apartment building is currently fluctuating around 62.7 million VND/m2, an increase of nearly 44% over the past year. July 2024 was the peak of the highest selling price ever.
1-year price history of apartments at Mon City (Reference source: Batdongsan.com.vn)
Unlike Mr. Tung, who can afford to buy a house at this time, in the case of Mr. Tat Thang and his wife (Cau Giay, Hanoi) chose to continue renting and monitoring the market. Witnessing the soaring apartment prices every month, Mr. Thang was still stunned and surprised that even suburban apartments had skyrocketed, making the dream of owning a home increasingly distant.
Mr. Thang shared: “My wife and I have saved nearly 3 billion VND. After surveying the area where we are currently living, we found that we could not afford to buy a new apartment in Hanoi. Even for used apartments, it’s hard to find a suitable one.” Therefore, the couple decided to wait, hoping that the supply could be improved after the market has “absorbed” the new Laws, bringing apartment prices back to a reasonable level.
There are many reasons for the high apartment prices and the continuous establishment of new price levels, but most experts agree that the lack of supply is considered the main cause of this situation.
According to Ms. Thu Hang Vie, Senior Director of Savills: “The limitation on supply, the imbalance in products, while the demand for housing is constantly increasing, and the number of completed and handed-over apartments in the past 1-2 years has been very modest, are the main reasons for the continuous strong increase in selling prices of apartments in Hanoi.”
Data from Savills shows that in Q2/2024, new supply decreased by 34% quarter-on-quarter and 25% year-on-year, with 2,697 units. Primary supply stood at 10,317 units, down 20% quarter-on-quarter and 49% year-on-year.
Sharing the same view, Mr. Tran Quang Trung, Business Development Director of OneHousing, believes that the reason for the high apartment prices, apart from the scarce supply, is also due to the high demand for home purchases and investments.
Mr. Trung said that in the period from 2016 to 2021, customers had a wide range of choices in terms of segments to invest in, such as land, resorts, villas, townhouses, and shophouses. But in the past year, investors have mainly chosen segments that meet real demands, real estate that can generate cash flow with high liquidity, focusing on large markets to avoid risks – and apartments have been their choice. Previously, people in Hanoi did not pay much attention to buying apartments for rent, keeping money, or living, but now they have changed their minds.
In addition, Vietnam has one of the fastest-growing middle-class populations in the world, and the demand for owning homes in the middle and high-end segments is significant. Developers also have to develop projects to cater to this group, which pushes up the prices of apartment projects.
The apartment market is expected to receive many positive signals as the new Laws have taken effect since August 1, 2024. However, in the short term, the shortage of supply has not improved. Meanwhile, Hanoi’s urbanization rate is about 51%, which means that Hanoi needs about 70,000 apartments every year to solve the housing problem for workers. However, the supply released to the market is very modest compared to the demand. Therefore, apartment prices are likely to continue rising from now until the end of the year.
Ms. Nguyen Hoai An, Director of Consulting and Research at CBRE Hanoi, believes that Hanoi apartment prices will continue to rise. It may not be until 2026 that the increase in Hanoi apartment prices stabilizes, creating a new price level.
Price Check: Thủ Đức District Hanoi Alleyway House Prices Near Tet Holiday
Compared to the beginning of 2022, the prices of private houses in the alleys of Thủ Đức City (HCMC) have decreased.
Astonishingly high price for old and dilapidated apartment buildings reaching nearly 200 million VND/m2, rivaling the most luxurious condominiums in Hanoi
Old collective apartments with prices starting from 100 million VND/m2 are usually the first-floor units that can be used for commercial purposes, while the upper-floor units are priced at 60-80 million VND/m2 for residential purposes.
Property prices soar, expert advises considering secondary markets
The prices of primary housing are currently at a very high level, and experts recommend that home buyers consider the secondary market as a viable option.
‘Unusual surge in prices of old apartments’
After years of hard work and saving, many families have accumulated huge sums of money. However, with soaring prices and record low interest rates, buying a home has become a challenging task for many.
