Hanoi apartment prices continue to increase with no end in sight

According to a report by Savills Vietnam, in the first half of 2024, the housing segments in Hanoi continue to be a hot spot in the real estate market. The apartment segment recorded a surge in interest, leading to a sharp increase in product prices in the secondary market.

Ms. Do Thi Thu Hang, Senior Director of Consulting and Research, Savills Hanoi, said: It is recorded that apartment prices in the secondary market in Hanoi have increased by an average of 25% in the past half year, even the class B and class C segments recorded a higher increase, fluctuating between 27% - 29%.

Meanwhile, in the primary market, apartment prices continue to increase. Since 2020, the average primary price has increased by 18% per year, while the secondary price has increased by 14% per year. By mid-2024, the primary price of the apartment segment will reach VND65 million/m2, up 10% quarter-on-quarter and 24% year-on-year.

Ms. Hang said that limited supply and imbalance in products are the main reasons leading to the continuous sharp increase in selling prices of the apartment segment.

According to Ms. Hang, in the second quarter of 2024, new supply decreased by 34% quarter-on-quarter and 25% year-on-year, with 2,697 units. Primary supply with 10,317 units, decreased by 20% quarter-on-quarter and 49% year-on-year.

The majority of apartment transactions recorded in the first 6 months of the year were in the Class B apartment segment. Class B accounted for 96% of the total 5,085 units sold. This segment provides quality services that meet daily living needs, helping buyers balance between home buying costs and quality of life.

Will house prices cool?

According to Ms. Hang, the Hanoi housing market is expected to enter a “new cycle” because the Land Law, Housing Law and Real Estate Business Law officially took effect early from August 1.

Ms. Hang analyzed that when the law takes effect soon, many market problems will be solved and the impacts will happen faster. However, it should also be noted that even if the law takes effect soon, it will still take time to solve the problem of limited supply because currently projects are still waiting for guiding documents.

Currently, the prices of housing segments are at a high level, greatly affecting investment decisions and market liquidity. When the guiding documents are gradually fully issued, prices are expected to become stable, and people's interests are more guaranteed, for example, the conditions and regulations for the sale of future products.

Previously unapproved projects will have a basis for resolution, and many other issues can be resolved, including land use fee calculation, land lease, and social housing development...

According to Savills experts, the early passage of the Law will also provide early support to the market, positively impacting the psychology of buyers and investors, helping them to be more confident in their decisions and business and development plans in the near future.

Typically, the Law on Real Estate Business also stipulates that investors are only allowed to collect deposits of no more than 5% of the value of the real estate. In addition, deposits are only allowed to be collected in cases where the houses and construction works have met all the conditions for putting into business according to the provisions of the Law on Real Estate Business 2023.

"This helps protect buyers from the risk of capital appropriation before completing the necessary legal procedures, giving buyers more time to prepare their finances. At the same time, this regulation helps create more confidence in transactions for the market," Ms. Hang emphasized.

Besides, in the coming time, with the limited land fund, projects and supply in the city center, the trend of moving to the suburbs will continue to take place strongly, affecting the housing segments.

For apartments, the majority of demand comes from the middle-income group. The affordability of this group is products under 3 billion VND, while the Hanoi market does not have many options for this price range. Therefore, buyers have considered projects located in the suburbs such as Nam Tu Liem, Ha Dong and Gia Lam, which provide up to 93% of the supply of this segment.

Commenting on this trend, Ms. Hang explained: In this context, the city is forced to invest in developing infrastructure around the belt, to reduce the load on the inner city, and to spread the population to the outskirts. Currently, there are new urban areas in areas far from the center that have invested in synchronous and quality utilities with an increasing number of transactions, making people more open to moving to these areas.

"Demand also comes from people who can work remotely, do not require much travel but can still have synchronous utilities and good landscape infrastructure," Ms. Hang added.