Hanoi's apartment prices increase sharply despite market gloom

In the apartment market, primary prices have increased for eighteen consecutive quarters and were 73 per cent higher than in the first quarter of 2019. — Photo chinhphu.vn

HÀ NỘI — Apartment prices in Hà Nội increased sharply despite market gloom in the first half of 2023, according to Savills Hanoi.

A report on the Hà Nội property market in the first half of 2023 released by Savills Hanoi on July 19 said that in the first six months of this year, primary asking prices of VNĐ53 million per sq.m net sellable area (NSA) on the apartment market increased by 1 per cent quarter-on-quarter and 17 per cent year-on-year.

Primary prices in the apartment market have increased for eighteen consecutive quarters and were 73 per cent higher than in the first quarter of 2019.

"This was due to increasing land and construction costs, infrastructure development, and quality improvements," said Đỗ Thu Hằng, senior director, Advisory Services, Savills Hanoi.

Secondary prices at projects close to Metro Line 2A stations increased by 22 per cent year-on-year, higher than the 13 per cent year-on-year market average.

"Prices on all apartment segments since 2021, especially in 2021, have been pushed up to a high level, making buyers worry about meeting profit expectations or not," Hằng said.

Meanwhile, the market continued soft performance in the first half of this year. There were 2,500 sales, decreasing by -6 per cent quarter-on-quarter but increasing by 11 per cent year-on-year, and newly launched projects were 28 per cent absorbed.

However, the market saw good supply from existing projects. New supply in the second quarter of 2023 increased by 76 per cent quarter-on-quarter and 125 per cent year-on-year with 3,596 units.

Primary stock of 20,412 units increased by 5 per cent quarter-on-quarter and 14 per cent year-on-year. Grade B had a 91 per cent share of stock.

Hà Nội's apartment market continued to be unbalanced in terms of supply, with a high part of mid- and high-end apartments. Meanwhile, the total supply of affordable apartments decreased to a low level, according to Hằng.

"The real demand for the apartment segment is still large, but it is for affordable apartments with convenient locations and services," Hằng said.

“Muted conditions will remain until the deposit rate falls, and more supply enters. The Government is dynamically working both sides of monetary and fiscal policy.”

However, the highlight in the first six months of 2023 was that the Government, ministries, sectors and local authorities have made great efforts to resolve difficulties for the real estate market. 

They included the issuance of Decree 08/ NĐ-CP on businesses' payment for corporate bonds and Resolution 33/NQ-CP on removing difficulties and obstacles of the market in terms of legal issues, capital sources and social housing. The Government's economic, financial and monetary management policies are creating more positive sentiment for the market.

Meanwhile, the Hà Nội People's Committee is considering withdrawing investment licenses from projects that have delayed construction for many years. That helps gradually create transparency for the market and eliminate poor-quality projects.

The time and ability of recovery on the property market depends on many factors, including legal clearance, capital sources and suitable products.

According to Savills Hanoi, the market will have more positive changes at the end of this year when the revised Land Law, Housing Law and Real Estate Business Law are expected to be passed along with the State's efforts in removing the obstacles and difficulties of the market.

"People can access more loans with reasonable interest rates than in the first half of 2023," Hằng said.

Savills Hanoi has also reported that Gia Lâm and Đông Anh will become urban districts this year, so in the second quarter, they had a 29 per cent share of Hà Nội's primary stock and a 34 per cent share of sales. From the second half of 2023 onward, Gia Lâm and Đông Anh districts will deliver 19,500 units.

By 2025, Hoài Đức, Đan Phượng, and Thanh Trì will become urban districts. Infrastructure developments such as Ring Roads 3.5 and 4 will support future supply and sales in these areas.

In the second half of 2023, nine new launches and the next phases of two projects will add 7,000 units. Hà Đông, Nam Từ Liêm, and Hoàng Mai will have a 73 per cent share.

Long-term residential demand will remain high with positive net migration, a growing population, and high urbanisation.

Between 2023 and 2025, there will be 157,000 new households. However, only 59,000 units of all grades, 9,000 landed properties and 18,700 social housing units are expected therefore, a shortfall of 70,300 units exists.