Two investors examine models of apartment for sale. Several projects in Hanoi experienced notable price hikes within the first two months of 2024. (Photo: VNA) One such owner, Minh, had initially planned to sell his apartmentin Cau Giay district. Despite the potential profit of nearly 40% from theoriginal purchase price of 3 billion VND, he changed his mind due to theoverwhelming interest from potential buyers.
The apartment was valued at 4.9 billion VND, and within a shortperiod, Minh received numerous offers, with some buyers even willing to payimmediately. However, he decided against selling when he noticed a similarapartment listed for over 5 billion VND. Minh and his wife were consideringselling to invest in land and build a garden house in their hometown, but theyhesitated due to the expected further rise in prices.
According to broker Thu Huong, most sellers in the current marketown multiple properties and therefore do not feel urgency to sell. Thefluctuating apartment prices, coupled with high demand, ensure that serioussellers can find interested buyers.
Huong also stated that the apartment segment is currently the mostprofitable, with distributors struggling to meet demand. Transactions forapartments ranging from 3-4 billion VND have been closed, resulting in aminimum profit margin of 20-30% per unit. This stands in contrast to the previousperiod when prices typically decreased after purchase.
The Vietnam Association of Realtors (VARs) understands thehesitation among apartment owners to sell, given the ongoing upward price trendin the market. Both the primary and secondary markets have witnessed dramaticprice increases, sometimes even doubling or tripling the original prices.
Data from Batdongsan.com.vn supportsthese observations, revealing that affordable and mid-range apartment listingprices in Hanoi have risen by approximately 20-33% between the end of 2023 andFebruary 2024. Comparing these figures to those from 2018, the average increaseranges from 100-150%.
Several projects in Hanoi experienced notable price hikes withinthe first two months of 2024. For instance, projects like Royal City, ThePride, My Dinh Song Da - Sudico Urban Area, and Sun Grand City witnessedincreases of around 33%. Mipec Rubik 360 and Vinhomes West Point saw a rise of28%, while Dai Thanh Apartments increased by 27%. Other projects like Seasons Avenue,Goldmark City, Trung Hoa - Nhan Chinh Urban Area, and The Emerald saw increasesranging from 25-26%.
Although at a milder rate of 2-5%, apartment prices in Ho Chi MinhCity also show an upward trend, following significant increases in the past fewyears. Projects like The Estella, The Opera Residence, My Khanh 3 and The Arthave witnessed moderate increases in various districts.
Over the past six years (2018-2024), the number of high-endapartment projects in the HCM City market has risen from 49 to 170, whilemid-range apartment projects have increased from 127 to 314. However, theincrease in affordable apartments has been modest, with the number of projectsrising from 639 to 679.
Sharp increase
Analysing the recent sharp increase in apartment prices in Hanoi,Nguyen Quoc Anh, Deputy General Director of Property Guru, highlighted thedisparity between supply and demand as the primary factor.
"Currently, the supply of apartments in Hanoi is veryscarce," said Quoc Anh. "Recent new projects only contribute about20,000-30,000 apartments per year, while the real demand is up to 70,000-80,000apartments."
Supporting this perspective, Dinh Minh Tuan, Director ofBatdongsan.com.vn in the South, emphasised that due to limited new supply andhigh demand for real estate purchases, apartment prices are predicted tocontinue rising. This trend will lead to an increase in prices for olderprojects in the same areas. Consequently, both the primary and secondarymarkets in HCM City are expected to experience stronger price growth in thenear future.
Data from the Department of Planning and Investment of HCM Cityrevealed that the city has only approved two new housing projects forinvestment policies in 2022, seven projects in 2023, and just one more projectby the end of the first quarter of 2024. Furthermore, many projects facechallenges related to financial obligations, land, planning and legal reviews,delaying the release of apartments. As a result, the supply of apartments inthe coming period will continue to trickle.
Le Hoang Chau, Chairman of the HCM City Real Estate Association(HoREA), shared his observation that the market has been experiencing a long-lastingshortage of new supply. Consequently, investors whose projects have beenapproved and implemented are seeking maximum profitability. It is not uncommonfor projects initially intended for affordable or mid-range housing to betransformed into high-end housing strategies to maximise profits.
VARs Chairman Nguyen Van Dinh believed that an improved supply ofsocial housing and worker housing will help stabilise apartment prices in majorcities like Hanoi and HCM City. However, this segment requires time to completethe necessary legal procedures before officially entering the market.
The market is currently awaiting new regulations and laws relatedto the real estate sector, which aim to alleviate difficulties faced byinvestors and buyers of social housing and housing for workers. Once theseregulations come into effect, there is an expectation of a significant surge insocial housing and worker housing, ultimately leading to a more suitable pricelevel for individuals with genuine housing needs.
Le Xuan Nghia, member of the National Financial and MonetaryPolicy Advisory Council, emphasised the importance of successfullyrestructuring the real estate market through the planned development of socialhousing and low-cost housing. Failure to do so may result in a repetition ofthe cycle where widespread high-end housing attracts speculators who drive upprices, ultimately leading to a market bubble./.
VNA
