On December 10, Vietnam Real Estate Electronic Magazine (Reatimes) and Vietnam Real Estate Research Institute (VIRES) jointly organized the Workshop "Hanoi Apartment Market: What is the sustainable living and investment choice?"
On December 10, Vietnam Real Estate Electronic Magazine (Reatimes) and Vietnam Real Estate Research Institute (VIRES) jointly organized the Workshop "Hanoi Apartment Market: What is the sustainable living and investment choice?"
Demand is increasing, prices are increasing with no sign of stopping.
According to the Vietnam Real Estate Association's report, in terms of supply, in the first 9 months of 2024, the Hanoi real estate market recorded more than 13,000 new products, an increase of about 25% compared to the total supply in 2023, showing that products from projects have been "pumped" into the market. Of which, 87% of the supply is of the high-rise type, mainly from high-end and luxury projects of major investors, concentrated in the East and West of the city.
It is noteworthy that the affordable apartment segment is completely "absent" from the market, while mid-range apartments are increasingly scarce. New apartment projects launched at the end of the third quarter all have starting prices of VND60 million/m2 or more, making it more difficult for middle-income customers to access housing.
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| Workshop "Hanoi apartment market: What is the sustainable living and investment choice?" |
On the demand side, demand in the Hanoi real estate market in the first 9 months of 2024 continued to maintain an upward trend, including both real estate demand and investment demand. Although new supply has improved compared to the previous year, it has not yet met the great demand in the market. Along with that, the primary price level continues to be "anchored" at a high level and is forecast to be difficult to decrease deeply, creating a driving force for people's decisions to buy houses early, especially in the context of concerns that prices will continue to increase in the future.
In terms of transactions, in the first 9 months of 2024, the real estate market recorded about 11,100 successful transactions, bringing the absorption rate on new supply to an impressive 83%. The apartment segment continued to be the focus of transactions with 95% of the total number of transactions belonging to this type. In particular, newly launched projects of major investors recorded an absorption rate of 90% right at the time of official launch.
Although not accounting for a large proportion like apartments, low-rise products when launched still recorded a positive absorption rate, reflecting high interest from buyers. However, the supply for this segment is not much, leading to great competition among investors.
As of the third quarter of 2024, the apartment price index in Hanoi increased by 64% compared to the second quarter of 2019, double the increase in Ho Chi Minh City. The average primary selling price is approaching 60 million VND/m2.
"Primary prices continue to rise and show no signs of stopping as supply, although improved, is still struggling to meet demand, as most new supply continues to be completed to high standards with high investment costs, especially land-related costs.
In addition, the high primary price in the context of scarce supply compared to demand has created a driving force leading to the secondary apartment price level continuing to maintain a high offering price even though liquidity has gradually leveled off after a period of "hot" growth, said Dr. Nguyen Van Dinh, Vice President of the Vietnam Real Estate Association and President of the Vietnam Real Estate Brokerage Association.
Prices will continue to rise but at a slower pace
At the conference, many experts commented that Hanoi apartment prices will continue to increase. According to research by the Vietnam Real Estate Association , in the period from 2000 to 2010, Hanoi apartment prices ranged from 10 to 20 million VND/m2; in the period from 2010 to 2020, apartment prices ranged from 20 to 50 million VND/m2 and from 2020 to present, apartment prices have increased significantly from 50 to more than 100 million VND/m2 depending on the area.
Mr. Ngo Huu Truong, Deputy General Director of Hung Thinh Corporation, said that in Hanoi, the price of apartments with real use value (for living or renting) has increased sharply in recent years. Areas such as Dong Anh and Hoai Duc, although located in the suburbs, still recorded an increase from 30-40 million VND/m2 to 70-80 million VND/m2.
The main factors that push up real estate prices include: New land price list pushing prices up; increased construction material costs and investors upgrading utilities to meet buyers' needs.
"In my opinion, real estate prices in Vietnam are forecast to continue to increase, but the growth rate may slow down due to signs of slowing purchasing power. The reasons include: Limited new supply due to the need for more time to resolve legal problems, and high new prices increasing transaction and investment costs," said Mr. Truong.
According to Mr. Truong's analysis, there are three main reasons for the increase in real estate prices. Firstly, the time for completing legal procedures is long, accordingly, the project approval process in Vietnam often takes a long time, from site clearance to completing legal procedures. This increases investment costs, thereby pushing up real estate prices.
Second, according to current regulations, land auctions must follow market prices. This makes the input value of projects higher, leading to an increase in real estate prices.
Third is the impact of inflation and exchange rates. Although inflation in Vietnam is well controlled, the increase in the price of gold and USD compared to VND has created upward pressure on real estate prices, because many investors use these assets as a basis for accumulating value.
"Therefore, I think it will be very difficult for real estate prices to decrease in the coming period," Mr. Truong stated his opinion.
Associate Professor, Dr. Dinh Trong Thinh said that 2024 is the year that the Hanoi apartment segment will witness a rapid increase in prices. Synthesis from market reports of research units shows that apartment prices have increased from an average of 40 million/m2 in 2022 to more than 70 million/m2 by the end of the third quarter of 2024, the market no longer has projects priced below 60 million/m2, many mid-range projects even have prices above 100 million/m2. Apartment prices have increased in both the primary and secondary markets, including old projects. During the fever, prices have increased by the day, by the week. It is worth noting that, despite the high prices, according to records, liquidity is still good, and there are still buyers.
On a positive note, this shows that the market sentiment in Hanoi is surprisingly improving. The pent-up demand for housing and investment has been unleashed as there are many drivers to restore the confidence of customers and investors in the market. The booming demand, while supply remains scarce, has pushed prices up.
" In the coming time, according to our assessment, apartment prices will hardly decrease, however, the price increase up to this point has slowed down somewhat, following a more stable trend, no longer in a feverish state like many previous months," Mr. Thinh commented.
According to Mr. Thinh, the primary supply has increased, the scarcity has been somewhat overcome, but mainly in the high-end, luxury segment over 100 million VND/m2, but through market observation and synthesis from reports, it can be seen that new supply is also absorbed quickly. The "softest" price is currently at 60-70 million VND/m2, coming from a number of newly restarted projects, in areas that were previously less noticed.
Accordingly, buyers' cash flow will tend to shift from areas with high price levels to areas and projects with more competitive prices and more room for growth.
Source: https://baodautu.vn/batdongsan/gia-can-ho-ha-noi-van-kho-giam-d232094.html
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