Prices increase in waves, no sign of decreasing

Ms. Thu and her husband (residing in Ha Dong District, Hanoi) decided to sell a piece of land in Thanh Tri District (Hanoi) to buy an apartment in the central area for investment and rental. After researching a series of apartments in districts of Hanoi such as Thanh Xuan, Cau Giay, Dong Da, etc., Ms. Thu said the prices were quite high.

"I sold a piece of land in Thanh Tri District for about 3 billion VND. If I buy an apartment of about 100 ^square meters in Cau Giay District or Thanh Xuan District, I will have to spend about 5 - 6 billion VND, depending on the project," Ms. Thu shared.

However, if she can buy an apartment in the inner city districts as above, Ms. Thu will be able to rent it out immediately for around 20 million VND/month. She is waiting to "put down money" for an apartment in Thanh Xuan District and has had a customer ask to rent it out immediately for 20 million VND/month.

According to a survey by Thanh Nien , the price of mid-range and affordable apartments in some inner-city districts of Hanoi is on the rise. For example, some projects in the areas of Nguyen Tuan, Le Van Thiem, Nguyen Huy Tuong, Vu Trong Phung, Le Van Luong streets... in Thanh Xuan District are priced at around 40 - 60 million VND/ ^m2 .

In the districts of Cau Giay, Nam Tu Liem, Hoang Mai, Hai Ba Trung..., the price is also equivalent to Thanh Xuan District, even buildings with full legal documents have prices exceeding 60 million VND/ ^m2 . The most expensive are the apartments in Tay Ho area (Tay Ho District). The price level here can be one and a half times, double that of other areas, especially projects near the lake or near the main road. The survey also shows that prices often increase in waves and show almost no signs of decreasing.

Regarding apartment rental prices, projects in Cau Giay and Thanh Xuan districts currently range from around 10 million VND to over 20 million VND/month for large apartments of about 90 ^m2 or more. Apartment rental prices in Tay Ho district are more expensive than other areas, depending on the area and equipment in the house, ranging from 10 million VND to about 30 million VND/month. Apartments over 130 ^m2 , with full amenities, can even cost up to 35 - 40 million VND/month.

A recent report by the Vietnam Real Estate Research Institute shows that in the first months of this year, demand for buying mid-range apartments increased by 45%, and for affordable apartments increased by 65%.

According to a survey by Batdongsan.com, in Hanoi, in May alone, the interest in the apartment segment increased by 8%.

Meanwhile, in the period 2018 - 2022, the supply of new apartments in Hanoi according to Savills Vietnam's statistics decreased by 14%, while the average selling price increased by 13%.

Real demand increases, market lacks new products

Mr. Hoang Van Nam (35 years old, residing in Cau Giay District), a real estate broker specializing in selling inner-city apartments, said that during the Covid-19 pandemic, apartment prices tended to remain stable and decrease sharply in many projects due to low real demand and ineffective rental.

According to Mr. Nam, during the Covid-19 pandemic, the price of a mid-range 2-bedroom apartment with an area of ​​80 - 90 ^m2 around Thanh Xuan District was only about 3 billion VND, equivalent to about 30 million VND/ ^m2 . But this "soft" price did not last long. When the Covid-19 pandemic showed signs of being controlled, the price of mid-range apartments in Thanh Xuan District increased quite sharply, to about 40 million VND/ ^m2 and was still increasing. For apartment buildings with full infrastructure and utilities below, the price increased sharply to over 50 million VND/ ^m2 .

Explaining the wave of increasing prices of apartments in Hanoi's inner city, Mr. Nguyen Van Thanh (40 years old, residing in Ba Dinh District), another broker, said that the price increase is due to the fact that the real demand for this type of apartment is always high, but the market is scarce with new products, mainly secondary products bought and sold.

According to Mr. Thanh, besides that, after the trend of leaving the city for the forest, investing in suburban land following projects, farm land, homestays..., many people have returned to investing in apartments because the liquidity of this type is better than land.

"An apartment in the inner city districts now has a rental price ranging from 10 to 30 million VND/month depending on the area, showing a much more stable cash flow than other types," Mr. Thanh analyzed.

Therefore, instead of investing in land or tourist apartment products that are currently under legal dispute, people with idle money are returning to invest in apartments. "Some people use financial leverage to buy apartments and then rent them out, using the rental income to pay bank interest," Thanh revealed.

Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, assessed that the price of inner-city apartments increased due to a number of reasons. The first is supply. Recently, in Hanoi, there have been almost no new apartment projects in the inner city being implemented, so the most active segment with the type of apartment is still old goods, bought and sold in the secondary market. Some new projects are being implemented but the investors have not yet opened for sale, some projects are stagnant.

Second, the factor pushing up apartment prices, especially inner-city apartments, according to Mr. Dinh, lies in demand. "Demand is always high, especially for moderate-sized apartments with 2-3 bedrooms, priced around 4-5 billion VND/unit. The demand is so high that the recent story of just one social housing project opening for sale in Nam Tu Liem District has caused a stir in public opinion for several months, let alone inner-city apartments. The sharp increase in social housing prices in the affordable segment also creates pressure to push up prices in the mid-range apartment segment," Mr. Dinh commented.

In addition, according to Mr. Dinh, the psychology and behavior of customers regarding investment products have somewhat changed. "A few years ago, the trend of investing in condotels, homestays, suburban land, forest land, and farms was booming, the psychology of investing in inner-city apartments such as condominiums and collective houses somewhat slowed down. But after a series of incidents related to the above new products, the "traditional products" have returned to have appeal," Mr. Dinh shared.