The real housing demand of the people is always high, especially in big cities like Hanoi and Ho Chi Minh City. Meanwhile, the supply of apartments in apartment projects in the current context is extremely scarce, contrary to the high demand among the people.
Accordingly, the prices of apartment projects continuously establish new price levels, mostly increasing from time to time, especially when there are fluctuations in the market.
Talking to Nguoi Dua Tin , Ms. Le Mai Linh (27 years old, Thanh Xuan) said that with a budget of about 1.3 billion VND, she wants to buy a 1-bedroom apartment in Gia Lam area, Hanoi.
In November 2023, the broker quoted her a house price of 1.4 billion VND/apartment, which was exactly what she needed. However, after reviewing the matter until February 2024, when she asked again, Ms. Linh was informed by the broker that the apartment price had increased to 1.9 billion VND/apartment. Correspondingly, after less than 3 months, the house price had increased to 500 million VND/apartment.
“The broker said that because Gia Lam was approved to become a district, the house prices in this area have also increased. Not to mention, in the near future, I was told that the house prices could continue to increase to more than 2 billion VND/apartment with 1 guest and 1 bedroom because the investor is sending out information that they will build an ecosystem surrounding these apartment buildings,” Ms. Linh shared.
House prices have skyrocketed over the years.
Research data from the Vietnam Association of Realtors (VARS) shows that the apartment price index in Hanoi in 2023 increased by about 38 percentage points compared to 2019. In Ho Chi Minh City, it was 16 percentage points.
In particular, the apartment price index is one of the indexes in the Real Estate Price Index Project that VARS is researching to reflect the fluctuations in real estate prices under the influence of market movements over time.
Specifically, apartment prices in Hanoi have been continuously increasing in both the primary and secondary markets. Meanwhile, apartment prices in Ho Chi Minh City have also begun to enter a cycle of price increases again, along with a gradual decline in high-end and luxury projects in the secondary market.
Apartments continuously set new price levels.
“The strong increase in demand for housing comes not only from the housing needs of urban households, but also from the constant increase in the labor force and students flocking to cities to work and study, especially in Hanoi.
It is also contributed by a large amount of increasing investment demand as rental prices of old and new apartments in residential areas have continuously increased since the social distancing period, especially in the context of the market recovery," VARS's report stated.
The gap between supply and demand is obvious.
Statistics from Batdongsan.com.vn show that the level of interest in apartments for sale nationwide in January 2024 increased by 66% compared to the same period in 2023, and the number of real estate listings also increased by 46%.
Specifically, the number of apartment searches in January 2024 in Hanoi increased by 71% compared to the same period. Similarly, in Ho Chi Minh City, the demand for apartment searches also increased by 59%. This trend is similar in most other provinces and cities.
Despite the strong increase in homebuyer demand, apartment supply is still not growing proportionally. Real estate market research reports from various units show that supply in 2023 has decreased significantly compared to previous years, even reaching the lowest level in the past 10 years. The number of new projects launched on the market can be counted on the fingers of one hand, although the end of the lunar year is usually the most exciting time for the market.
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Apartment supply in 2023 recorded a decrease in both Hanoi and Ho Chi Minh City markets.
In Hanoi, the supply of new apartments in 2023 is estimated at 10,500 units, down about 31% compared to the previous year. In Ho Chi Minh City, the supply of new apartments is estimated at nearly 7,500 units, down more than 50% compared to the same period in 2022.
In addition to Hanoi and Ho Chi Minh City, other provinces and cities across the country are also lacking primary supply, with only a few projects in the provincial market offering the next phase.
Batdongsan.com.vn's report also stated that the supply of apartments has decreased recently due to the increasingly scarce number of newly approved real estate projects while ongoing projects are "struggling" due to legal and capital problems.
Although the efforts to remove difficulties by the Government, ministries and branches have achieved some remarkable results, the number of projects deployed and restarted in 2023 has increased sharply, but the cash flow pressure has not yet eased for real estate businesses.
What are the expectations for apartment prices?
Commenting on the above issue, VARS Chairman Nguyen Van Dinh said that after a long period of decline, the supply of apartments in both special urban areas is also expected to increase again thanks to the recovery of the market and efforts to remove legal obstacles for projects by State management agencies, especially the supply of social housing and workers' housing.
“However, this supply needs time to complete legal procedures before being officially launched on the market and mainly comes from areas far from the center,” Mr. Dinh said.
Therefore, VARS representative forecasts that in the short term, apartment prices in the center of big cities will continue to increase, especially in the affordable and mid-range segments. Meanwhile, the purchase and resale prices of high-end and luxury projects may record a slight decrease.
VARS Chairman Nguyen Van Dinh.
Further analysis, Mr. Dinh commented that the continuous increase in apartment prices is mainly due to the extremely scarce supply of projects on the market. Meanwhile, the apartment segment offered for sale at this stage belongs to large investors with good financial potential, so the apartment prices are always priced at a high level.
Another problem that makes it difficult to lower apartment prices is that the current construction costs that investors have to pay also increase sharply every year, plus the scarce land fund makes it very difficult to lower apartment prices.
Stating his expectations, Mr. Dinh said that with the foundation of a series of positive factors of the current market, by mid-2025, when the new laws related to the real estate sector are passed with new regulations towards removing difficulties for investors and buyers of social housing and housing for workers, housing for workers will officially take effect.
"The supply of social housing will increase, and apartment prices will drop to a level more suitable for people with real housing needs," said Mr. Dinh .
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