by DAN THANH - TRUONG DANG 07/06/2024, 02:38

Is the Hanoi apartment market entering a new price-hike cycle?

Experts believe that apartment prices will remain constant in the near future before initiating a new cycle of price hikes over the following 1-2 years as supply falls short of market demand.

In Q1/2024, main apartment prices in Hanoi climbed by 11% compared to the same time in 2023, while secondary market prices increased by around 14.4%, reaching around 55 million VND/m2, close to the primary price set by developers.

Despite the price increase, the whole Hanoi market saw 12,000 transactions in the first three months of the year, indicating that apartment prices in Hanoi had stabilized at a new level following the previous boom.

In Hanoi, 75% of the newly opened apartments still come from projects launched in and before 2023

According to OneHousing's Market Research & Customer Insight Center, Hanoi's major apartment market is still recovering positively. Both new supply and primary sales in Q1/2024 exceeded 3,000 units, 2.1 times greater than in 2023, but still only accounted for 80% of Q1/2022.

Only a few significant developers in Hanoi can introduce new items, with the majority focused on the East and West. Specifically, 75% of newly opened apartments continue to originate from projects begun in or before 2023, with only four new apartment complexes built in Q1/2024. This is also the third straight quarter in which new supply was lower than demand, indicating that primary supply is limit   ed in the Hanoi market.

Data from OneHousing's Market Research & Customer Insight Center showed that primary apartment prices in Q1/2024 remained consistent at around 58.5 million VND/m2, as many subdivisions in significant urban regions maintained their rates. However, compared to Q1/2023, the main price in Q1/2024 climbed by 11%.

Meanwhile, the average secondary market apartment price climbed by 14.4% compared to Q1/2023, reaching 55 million VND/m2, which is similar to the developer's main pricing. Secondary prices increased in practically all developments in Hanoi's East and West districts.

Secondary market prices in the East are comparable to primary prices, with lower-priced subdivisions experiencing large increases in Q1. Meanwhile, secondary prices in the West remain around 7 million VND/m2 lower than primary pricing, as numerous high-end projects continued to debut in Q1/2024.

Despite high apartment prices, the Hanoi market saw over 12,000 transactions in Q1/2024, including both primary and secondary sales. Mr. Tran Quang Trung, Business Development Director at OneHousing, stated that these indications suggest that the Hanoi apartment market has established a new pricing baseline following the recent spike.

"Recently, some developers launched products and sold them very quickly. As both new sales and transfers increased in price, with supply being lower than consumption, it's time the market accepted the new price level," the expert stated.

Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, agrees that, in the short term, apartment prices in major city centers will continue to climb, particularly in the inexpensive and mid-range sectors. Meanwhile, buy-and-resell prices for high-end and luxury projects may fall somewhat. Then, as the supply of social housing grows, apartment costs will fall to a more accessible level for individuals with genuine living requirements. The supply of residences in Hanoi and Ho Chi Minh City is anticipated to grow further.

However, Mr. Dinh believes that investors should be patient and wait since, in the near future, when new rules go into force, many projects will be unblocked, therefore increasing market supply. When supply grows, apartment prices will fall, but not much, and will stabilize.

As a result, both investors and homebuyers should carefully analyze the legal concerns, the developer's reputation, and the project area's infrastructure synchronization before purchasing items at reasonable rates.