Red-Hot Hanoi Condo Market: Prices Surge, Leaving Buyers Frustrated
According to Vietnam’s Ministry of Construction, there has been a significant price surge in Hanoi’s condo market in the second quarter, with some projects in popular areas seeing double-digit increases. This has left buyers struggling to find affordable options, with prices starting at 3 billion VND and above.
The ministry attributed the price hikes to high demand and limited supply, with new projects located farther from the city center starting at 3.2-4.5 billion VND for 2-3 bedroom apartments. The secondary market has also witnessed substantial increases, with some projects in districts like Tay Ho, Cau Giay, and Thanh Xuan seeing double-digit growth in selling prices.
This trend of increasing condo prices has also spilled over into the market for detached houses and land in projects and existing residential areas. However, there are signs that the market is stabilizing as prices have reached a high point, and buyers are adopting a wait-and-see approach.
Hanoi’s condo market experiences a significant price surge.
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Real estate prices surge in Q2, including older condos
Hanoi Condo Prices Soar: A 200-300 Million VND Jump
Market data from Batdongsan.com.vn reveals a 2.4% increase in overall interest and a 6% rise in listings for Hanoi’s real estate market in July 2024 compared to the previous month. Condos continue to lead the way, with a 6% jump in both interest and listings.
For the rental market, condos and room rentals witnessed the most significant surge in interest, at 15% and 10%, respectively. The price hike for condos in Hanoi shows no signs of abating and has intensified over the last two months.
In Nam Tu Liem district, 2-bedroom units in Mon City have climbed from 3.5-3.6 billion VND to 3.7-3.9 billion VND. 3-bedroom apartments in the Sudico My Dinh project have also increased from 4.4-4.6 billion VND to 4.6-4.8 billion VND. Vinhomes Smart City residences have seen average increases of 150-250 million VND over the previous two months.
In Hoai Duc district, the Gemek project has witnessed a rise from 2.7-2.8 billion VND to 2.75-2.9 billion VND for 2-bedroom units. The Golden An Khanh project has also experienced average price hikes of 200 million VND over the last month.
In Cau Giay district, 2-bedroom apartments in the Home City project are now priced at 4.7-4.9 billion VND, reflecting an average increase of 200-300 million VND from two months ago. In Nam Trung Yen, similar units have jumped from 2.8-3 billion VND to 3.1-3.4 billion VND.
In Thanh Xuan district, Gold Season’s 2-bedroom condos have risen from 4.2-4.4 billion VND in May to 4.4-4.6 billion VND currently. Other projects in the district, including Thong Nhat Complex, Bohemia, Hanoi CenterPoint, Times Tower, and Golden Palace, are experiencing average increases of 250-300 million VND.
Gold Season project sees a 200 million VND price increase since May.
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Unraveling the Reasons Behind Hanoi’s Condo Price Surge
Mr. Dinh Minh Tuan, Director of Batdongsan.com.vn in Southern Vietnam, attributes the price surge in Hanoi’s condo market to a supply shortage, with demand for owner-occupied units outpacing the limited supply. He also points out that projects in surrounding areas, such as the West and East of Hanoi, are facing similar supply issues and legal hurdles, prompting developers to set higher prices, which, in turn, affects prices in the city center.
Additionally, attractive rental yields have encouraged investors to shift their focus to this sector. Mr. Tuan cautions investors to remain calm and thoughtful in their investment decisions, as the market is influenced by the fear of missing out, which can lead to impulsive purchases.
“The secondary market is impacted by investment capital. Previously, Hanoi residents often invested in other provinces and cities. Now, with the Ho Chi Minh City market and other provinces facing legal issues and scandals involving developers, capital is flowing back into Hanoi, further fueling price increases. The fear of missing out also contributes to the overall market surge,” Mr. Tuan explained.
Will Ho Chi Minh City’s Condo Prices Follow Suit?
Historically, condo prices in Hanoi have been approximately 30% lower than in Ho Chi Minh City. However, with the recent surge, Hanoi’s average prices have caught up, reaching around 50 million VND per square meter. Experts predict that Ho Chi Minh City’s condo prices will start to climb, while Hanoi’s market will stabilize rather than continue to rise. If Hanoi’s prices keep increasing, it could pose risks for investors considering purchases in the near future.
“When condo prices surge and approach Ho Chi Minh City levels, the market will tend to adjust until the end of 2024, as the upward momentum is driven by demand within a specific period. Once this phase ends, the market will correct itself,” Mr. Tuan shared.
Looking ahead, Mr. Tuan forecasts that Hanoi’s market, having already experienced significant increases, is unlikely to see further substantial growth in the next 2-3 years. “On average, a condo project should increase by 8-12% per year, which is considered positive. If the growth rate exceeds this range, it may not be sustainable,” he advised.
For those seeking to purchase a condo for their own use, Mr. Tuan recommends reconsidering their plans, as the recent price hikes are primarily driven by investors. He suggests waiting for investor activity to subside before making a decision, as prices may correct once investors have achieved their profit targets.
“It’s important to recognize that when house prices have already increased by 30%, there will be a period of adjustment. At that point, we’ll see if the market stabilizes or declines. Some condo projects in Hanoi have already adjusted their prices to facilitate sales,” Mr. Tuan elaborated.
For investors considering purchasing condos for rental income, Mr. Tuan emphasizes the need to assess the potential rental yield and target a minimum of 4-5% to ensure profitability. If the projected rental yield drops below 2%, it’s best to refrain from investing.
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