“Condo Prices Rivaling Those of Townhouses and Villas”

Apartment prices at some projects are on par with adjacent villas and townhouses

According to a report by the Vietnam Real Estate Brokers Association (VARS), the housing supply structure has been severely imbalanced. The market had approximately 14,500 new products launched, a 50% decrease compared to the end of last year. However, 58% of the total supply consisted of luxury products.

Hanoi’s apartment price hikes are mainly due to newly launched projects becoming increasingly expensive. Meanwhile, some projects’ selling prices remained stagnant after a period of rapid increases.

“The new housing supply primarily caters to high-income individuals and investors, posing risks to the market’s sustainable development,” VARS stated.

In reality, apartments in Tay Ho district range from VND 150-270 million/sqm. In Ba Dinh district, sky villas are advertised at VND 250-260 million/sqm, while regular apartments are still priced at VND 140-200 million/sqm. Notably, in Hoan Kiem district, a branded apartment project is offered at VND 500-700 million/sqm. Even in Dong Anh, apartment prices reach VND 110 million/sqm.

With these prices, apartment units are comparable or even surpass the prices of adjacent villas and townhouses in many projects in other areas of Hanoi.

According to Tien Phong’s observations, the price of over VND 100 million/sqm first appeared at the end of 2021 and the beginning of 2022. Prior to that, Hanoi’s market did not record such prices from developers. However, since the beginning of this year, this product segment has been on the rise.

One of the main reasons for the sharp increase in apartment prices is the rising input costs, including land prices, materials, legal fees, and financial expenses. Additionally, the limited supply of affordable apartments and social housing leaves residents with fewer options.

According to Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, the new Real Estate Business and Housing Laws have created a new legal corridor, eliminating financially weak investors. The remaining investors in the “playground” are developing large-scale urban areas with synchronous infrastructure and utilities, resulting in higher costs and making it difficult to lower housing prices.

At the same time, with only financially strong investors left in the market, those with the advantage of land acquisition will continue to maintain supply monopolies. These large investors will continue to set market prices higher to maximize profits. This situation underscores the urgent need to improve the effectiveness of state management regarding the real estate market.

Buyers are becoming more cautious

According to experts, the high prices will also affect the liquidity of this segment. While apartment prices, especially in the luxury segment, have increased, the liquidity of products over VND 150 million/sqm remains low due to a limited customer base. The apartment market, in particular, and the real estate market, in general, are experiencing a slowdown, resulting in minimal transactions for luxury and high-end products.

Another critical factor reducing liquidity is the cautious mentality of buyers. After a period of rapid increases, both real buyers and investors tend to wait and see. Many residents with genuine needs are unable to find suitable products within their budget. Investors are also more cautious before making decisions, especially with the unstable interest rate environment and the current stagnant real estate price increases.

Dr. Dinh The Hien, an economic expert, stated: “Pushing apartment prices too high while the actual utility value remains disproportionate will create a market distortion. This not only affects the homeownership of residents but also poses risks of real estate bubbles.”