According to the “hidden” law of the real estate market, land is an asset, while apartments are a liability. That is, the longer the land is left, the more valuable it becomes, but with apartments, the longer the house is left, the more it loses value.
However, at present, this rule is almost gone. The value of apartments in both the primary and secondary markets has increased sharply.
Illustration photo. (Photo: TM)
According to a report by Savills Vietnam, in just the past 4 years, apartment prices in Hanoi have increased by 77%. In the third quarter of 2023 alone, the primary price of apartments reached 54 million VND/m2, an increase of more than 77% compared to the first quarter of 2019, marking the 19th consecutive quarter of price increase.
Meanwhile, according to a survey by reporters from the Journalists and Public Opinion Newspaper, in the past year alone, the apartment segment in Hanoi has recorded a rapid price increase, from 5 - 15% depending on the area and project. Currently, apartment prices in Hanoi are holding very well.
Regarding this issue, Mr. Vu Cuong Quyet, General Director of Dat Xanh Mien Bac Real Estate and Services Joint Stock Company (Dat Xanh Mien Bac) commented that although the real estate market has shown signs of slowing down over the past year, the prices of many real estate segments, especially the apartment segment, have not cooled down, but have increased steadily over the quarters.
“Products that target real housing needs do not see price reductions. In particular, the segment with real housing needs such as apartments does not see price reductions, but prices even increase steadily over the quarters, even every month,” said Mr. Vu Cuong Quyet.
Explaining this, Mr. Quyet analyzed that segments that focus on usage needs will find it difficult to reduce prices because demand is always very high. Moreover, the sharp increase in apartment prices in recent years is actually due to a long period before that, apartment prices did not increase at all, so they increased in recent years, causing a large increase.
According to Mr. Quyet, recently, prices have only decreased in products that are inclined towards investment and speculation. In fact, in the past, the prices of investment products were pushed up too high because investors in Vietnam tended to invest following trends. When seeing an investor gain big profits from real estate, it would attract many other investors to participate in this market.
“The products with sharp price reductions and loss-cutting are mainly investment, speculative and surfing real estate. In particular, among the investment products, there are still products that do not have full legal status. And in recent years, these products without full legal status have been used by investors of many units to raise capital,” said Mr. Quyet.
Therefore, in the context of the real estate market fluctuations, this product is the most affected. Due to the lack of legal status, the transfer and sale are facing many difficulties. Therefore, products in this segment have decreased sharply in price from 40 - 60%. Meanwhile, the segment with real demand has not decreased in price, even increased in price.
Meanwhile, Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Real Estate Brokers (VARS), said that apartment prices will continue to increase in both the primary and secondary markets, especially in the affordable and mid-range segments and in projects that are nearing the end of the product line.
This expert also emphasized that supply is increasingly scarce while the cost of land fund creation, raw material costs, and financial access costs are increasing... Therefore, real estate projects find it difficult to reduce prices and are forced to maintain high selling prices.
"The price increase may stop when procedural, legal and capital problems are resolved, boosting market supply," Mr. Dinh emphasized.
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