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 supply being completed and positioned at a higher standard. Some mid-range apartment projects also witnessed price increases of 3-5% due to the scarcity of supply in this segment.
According to the Association’s data, apartment prices in Hanoi, Ho Chi Minh City, and Danang in Q2/2024 rose by 58%, 27%, and 45%, respectively, compared to 2019.
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A survey of the market also reveals a similar trend of increasing apartment prices. Mr. Nguyen Duy Tri, a resident of Dong Da, Hanoi, shared his experience of making a VND 200 million profit 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, real estate brokers were offering to buy the 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 his insights: “From 2014 to the present, the value of apartments has continuously increased rapidly. According to CBRE, apartment prices have risen by 13-15% annually. Until now, the apartment segment has shown no signs of cooling down.”
Mr. Giang further elaborated that to understand the current situation of rising apartment prices and determine if it is an abnormal phenomenon, 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 has not kept up with the demand of the population. In other words, I believe that the shortage of supply is a significant factor contributing to the rise in apartment prices, which is not necessarily abnormal. Accompanying the price increase, the demand for real estate purchases has also grown strongly, with a total search volume increase of more than 10%.
According to Mr. Nguyen Dung Minh, Deputy General Director of MIKGroup, in the coming time, I expect the new laws to create opportunities for large investors with large-scale projects that bring real value to society. In the last 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 stands at VND 80-90 million/m2. This demonstrates not an overheated market but the appreciation of 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 the next, the average selling price is expected to climb even higher.
