Hanoi Apartment Prices Unlikely to Ease Soon

The housing market in Hanoi is experiencing a significant shortage of mid-range apartments

Undersupply, soaring prices

Based on historical price data from Batdongsan.com.vn, the most significant price increase, at 33%, was observed in Hanoi’s Royal City, The Pride, My Dinh Song Da - Sudico Residence, and Sun Grand City. This was closely followed by Mipec Rubik 360 and Vinhomes West Point, which saw a rise of 28%, Dai Thanh Apartment (27%), and Seasons Avenue (26%).

The surge in apartment prices is understandable given the high demand for housing in major cities. Batdongsan.com.vn data indicates that searches for apartments in Hanoi escalated by 77% year-on-year following the Lunar New Year. A consumer sentiment survey revealed that 65% of respondents intend to purchase real estate within the next year.

The housing market in Hanoi is experiencing a significant shortage of mid-range apartments. As per the Vietnam Association of Realtors (VARS), the market lacks commercial housing units priced below VND30 million per square meter. Projects currently for sale are priced at VND40 million per square meter and are only available in neighboring provinces such as Bac Giang, Bac Ninh, and Hung Yen.

The escalating housing prices pose a challenge for many middle-income earners striving to achieve their dream of homeownership, particularly given the consistently high demand for affordable housing in densely populated cities like Hanoi.

Market surveys reveal distinct regional variations in selling prices. Luxury apartments in downtown and western Hanoi are primarily priced from VND60 million upwards for a square meter. The Canopy is listed at VND64 million per square meter, while Lumiere Evergreen starts from VND75 million per square meter. In the eastern region, prices range from VND55 million per square meter at Khai Son City, VND54 million at Le Grand Jardin, VND52 million at Binh Minh Garden, to VND42 million at Eurowindow River Park.

Experts predict that apartment prices are unlikely to decrease in the near future

Much room for higher price

Despite consistent growth, experts predict that apartment prices are unlikely to decrease in the near future. VARS estimates that the primary selling prices of apartments in Hanoi will continue to rise by an average of approximately 3 - 8%. Provided that cash flows remain robust, investors are likely to maintain high selling prices to optimize profits.

Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan.com.vn, emphasized that the apartments in Hanoi are not excessively overpriced. He explained that the price increase is partially a reflection of the supply-demand dynamics. In Hanoi, the supply is insufficient to meet the demand, leading to escalating prices. Savills Hanoi also projects that property prices will continue to rise due to increasing land and construction costs, improved infrastructure, and enhanced quality.

In its investment outlook report for February 2024, VNDirect Securities Company highlighted a positive forecast for the real estate market in the latter half of 2024, when loan disbursement conditions are expected to ease. Consequently, lower bank loan interest rates are anticipated to broaden access to home loans for investors, potentially stimulating overall home buying demand. Additionally, the relaxation of credit lending is a positive indicator for real estate businesses, particularly with the maturity of corporate bonds in 2024.

In the context of record-low interest rates and a thriving market, cash flows are being directed toward the apartment segment in major cities like Hanoi. For the first time in two decades, deposit interest rates for 1 - 2-month terms and for 6 - 11-month terms have sharply fallen to below 3% and to 3.5% per annum, respectively. Conversely, many banks are offering attractive real estate loan packages with interest rates of less than 6% per annum.

The significant reduction in interest rates, combined with the government’s policies to revive the real estate market - such as easing credit restrictions and resolving legal issues related to the Land Law, the Housing Law, and the Real Estate Business Law - has stimulated the flow of idle cash into real estate.

Experts at Batdongsan.com.vn believed that the positive development in the apartment sector indicates signs of a market reversal. Anh said: “The market is gradually entering a new cycle, beginning with residential properties such as apartments and private houses, with increased efforts to enhance liquidity. By the start of 2025, the market is expected to enter a consolidation phase. Currently, the market is constrained by bond debentures. If effective measures are implemented to increase cash flows into the market, most types of real estate are likely to recover and enter a stable development phase by the beginning of 2026.”