Hard to find apartments priced under 32 million VND/m2
Mr. Ly Van Phung left his hometown in Hoa Lu, Ninh Binh to start a business in Hanoi more than 14 years ago. After 6 years of marriage and 2 children, he always aspired to buy an apartment to "settle down, have a career", and stabilize his life.
He and his wife both run a business in Trieu Khuc craft village (Thanh Tri district) and sell fruits online, so they save more than 100 million VND each year.
The steep increase in apartment prices is making the dream of home ownership increasingly further away for low-income people. (Illustration photo)
Mr. Phung said that after more than 6 years of saving, he and his wife have earned more than 800 million VND.
"Both families agreed to support my husband and I with about 1 billion VND when we bought a house. Adding both amounts together, we had about 2 billion VND to buy an apartment. We thought that with that amount of money, we would be able to find an apartment of about 55 - 65 square meters, 2 bedrooms, 2 bathrooms.
However, for many months now we have continuously posted information and asked real estate brokers to search for suitable apartments but have not found any priced around 2 billion VND," said Mr. Phung.
According to Mr. Phung, when looking to buy a new apartment in Hoang Mai, Cau Giay, Bac Tu Liem, there is no apartment priced below 38 million VND/m2. Typically, apartments in the Rose Town Apartment Project, 79 Ngoc Hoi are being sold by real estate trading floors at sky-high prices.
“A 2 bedroom plus 1 apartment, area 89m2, basic furniture, direct payment price after discount is 3.9 billion VND, approximately 44 million VND/m2. 3 bedroom apartment 104m2, basic furniture, tentative price 4.9 billion, more than 47 million VND/m2.
We also looked for smaller apartments, but all the floors said they were out of stock, or if they were, we had to buy them back at 52 million VND/m2. With such a price, we workers wouldn't even dare dream of buying an apartment," said Mr. Phung.
Reporters investigated at The Wisteria Hidone Royal Park apartment project, located in Hinode Royal Park Urban Area, Kim Chung Commune - Di Trach Commune (Hoai Duc, Hanoi). Real estate brokers at this project said that the project is expected to be completed and handed over in early 2025, the investor only installed doors, locks, laminate flooring in the living room and water heater. The remaining sanitary equipment, bathtubs and showers are not available.
“The investor also has a policy of paying in full or signing a bank loan contract. If the buyer pays on schedule, the price will be reduced by 1% compared to the advertised price.
If the bank guarantees the apartment handover progress, the price will increase by 1.5% compared to home loans but does not guarantee the handover progress. The investor will support a 24-month grace period policy and no interest. The average price per square meter of an apartment in the project is from 45 to 48 million VND/m2," said a broker of this project.
PV researched used apartments in projects that have been implemented for many years but the selling price is also very high.
Typically, at Licogi 19 apartment building - No. 25 Tan Mai, Hoang Mai district (a project that has been around for decades), an apartment with an area of 81m2, 2 bedrooms, 2 balconies is also being sold by the owner for 3.6 billion VND, equivalent to about 44.5 million VND/m2.
Another apartment in Linh Dam, known as a low-income housing area with a dense population and a lack of places for students to study, is also being sold at an exorbitant price. Specifically, an old apartment of 85 square meters, 2 bedrooms, 2 bathrooms, with peeling and degraded walls, is also being sold for 2.8 billion VND, equivalent to 33 million VND/square meter.
4 years, apartment prices nearly doubled
According to the Ministry of Construction, apartment prices are very high at the end of 2023. In Hanoi, the average selling price of newly launched apartments is about 50.8 million VND/m2, up nearly 7% quarterly (about 3.6 million VND/m2), 14% annually (about 7 million VND/m2).
The average price of an apartment is 45 million VND/m2, double that of 2019. (Illustration photo)
Surveying the reality of old apartments in the Hanoi market, in the past 4 years, many apartment buildings have doubled in price, or even higher.
For example, a class C apartment with 2 bedrooms in Hoang Mai district cost 20 million VND/m2 in 2018, but is now priced at 35 million VND/m2. Meanwhile, a 2-bedroom apartment in Tan Tay Do (Dan Phuong) at the end of 2019 cost 1.1 - 1.2 billion VND, but is currently being offered for sale at 2.2 - 2.5 billion VND. With the sudden increase in prices, many people cannot find an apartment to buy because of the scarce supply.
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.
In other words, the price of an apartment is now nearly twice as expensive as it was at the beginning of 2019. Meanwhile, the supply of new apartments in Hanoi in the quarter continued to decrease by 65% compared to the same period last year, down to 1,891 Class B apartments.
Notably, the market did not record any new supply of Class A and C apartments in the last quarter. The primary supply of apartments reached 19,808 units, down 6% year-on-year, of which Class B apartments accounted for 92%. The number of apartments sold decreased sharply by 42%, reaching 2,100 units.
Dr. Nguyen Van Dinh - Chairman of the Vietnam Real Estate Brokers Association said that the reason for sky-high apartment prices is due to rising land prices and construction costs.
In addition, the need to invest in improving the quality of products and surrounding infrastructure and utilities, and internal projects also leads to primary market prices or prices of newly launched projects always being higher than the general level.
“It is impossible to find an affordable apartment for 30 million VND/m2 in Hanoi or Ho Chi Minh City at this time. In 2018 - 2019, with a budget of about 2 billion VND, buyers can own a 55 - 60m2 apartment in Hanoi districts such as Cau Giay, Thanh Xuan, Hai Ba Trung, Hoang Mai.
But now, the apartment price level has increased many times. Therefore, with 2 billion VND, home buyers will have a hard time finding a new apartment in the city center," said Mr. Dinh.
Mr. Dinh predicted that although apartment prices are already sky-high, they will likely continue to increase because supply is limited, while real housing demand is constantly increasing. This makes it increasingly difficult for people to buy apartments when housing demand is increasing, there are no new projects, and people's income is limited.
"This is really difficult for low-income people, young families, and families from rural areas moving to the city. In the future, apartment projects will continue to increase in price due to scarcity, while investors must optimize profits when input costs from materials, labor, to land prices... increase and are all added to the cost price, causing apartment prices to increase," said Mr. Dinh.
PHAM DUY
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