Land Law will bring Hanoi housing market into a "new cycle"

Apartment segment receives sudden attention from Hanoi market

In the first half of 2024, the housing segment continues to be a hot spot in the real estate market. The apartment segment recorded a surge in interest, leading to a sharp increase in product prices in the secondary market.

Savills Vietnam's Q2/2024 report shows that since 2020, the average primary price has increased by 18% per year, while the secondary price has increased by 14% per year.

By mid-2024, the primary price of the apartment segment will reach VND65 million/m², up 10% quarter-on-quarter and 24% year-on-year. Notably, Savills recorded no new supply below VND45 million in the second quarter of 2024.

Limited supply and product imbalance are considered by Savills Vietnam to be the main reasons for the continuous sharp increase in apartment prices.

Source: Savills Market Overview Report 6 months/2024.

In Q2/2024, new supply decreased by 34% QoQ and 25% YoY to 2,697 units. Primary supply decreased by 20% QoQ and 49% YoY to 10,317 units.

The majority of apartment transactions recorded in the first 6 months of the year were in the Class B apartment segment. Class B accounted for 96% of the total 5,085 units sold.

This segment provides quality service that meets daily living needs, helping buyers balance home buying costs and quality of life.

Ms. Do Thi Thu Hang - Senior Director, Consulting and Research Department, Savills Hanoi said: "In comparison with the same period last year, the average price of apartments in the secondary market increased by 25%, even the class B and class C segments recorded an increase of 27% to 29%".

Villa segment recovers slowly

Regarding the villa/townhouse segment, according to Savills' report , there are signs of slow recovery.

In the first 6 months of the year, the number of transactions in the villa/townhouse segment decreased by 40% quarter-on-quarter, although it increased by 5% year-on-year, reaching 111 units, the quarterly absorption rate was only 18%. The new supply had an absorption rate of 48%, down 15 percentage points quarter-on-quarter and 3 percentage points year-on-year.

The majority of primary transactions were recorded in Ha Dong district with 61%, thanks to infrastructure projects nearing completion such as Le Quang Dao street, expected to be operational in the fourth quarter of 2024. Hoang Mai district and Thuong Tin district followed with 14% and 9% respectively.

Ms. Do Thi Thu Hang - Senior Director, Consulting and Research Department, Savills Hanoi.

Ms. Hang explained: "The villa/townhouse segment in projects has not shown signs of recovery, prices have increased at a high level, but liquidity is not good. Meanwhile, neighboring markets still have new supply with competitive prices, and demand for purchases is higher."

Specifically, the supply of villas in new projects remains abundant. According to Savills' report, the new supply reached 128 units, up 38% quarter-on-quarter but down 2% year-on-year.

New supply comes from two existing projects in Ha Dong: An Quy Villa with 54 villas, while An Lac Green Symphony in Hoai Duc has 12 new townhouses, and Him Lam Thuong Tin has 11 new shophouses.

Primary supply reached 608 units from 16 projects, down 9% QoQ and 24% YoY. Villas dominated the primary supply with 39% due to new supply in the quarter.

In the first 6 months of the year, primary prices of villas in projects increased by 9%, reaching 178 million VND/m2 of land.

Townhouse prices fell 2% quarter-on-quarter to VND188 million per square meter, mainly due to the high-priced units being sold out and only lower-priced units remaining.

Shophouse prices also increased by 3% quarterly, reaching VND 288 million/m² of land.

Land Law supports real estate market

According to Ms. Hang, the Hanoi housing market is expected to enter a "new cycle" because the Land Law, Housing Law and Real Estate Business Law officially took effect early from August 1.

"When the law comes into effect early, many market problems will be solved and the impacts will happen faster.

For example, the problem of limited supply in many localities. When supply is limited, people's choices are reduced, leading to unstable prices and a tendency to increase. Solving the problem of limited supply will have a positive impact on the general market.

However, it should be noted that even though the law takes effect soon, it will take time to resolve the problem of limited supply because projects are currently waiting for guidance documents," Ms. Hang said.

Ms. Hang pointed out that the current prices of housing segments are high, greatly affecting investment decisions and market liquidity.

As the guidelines are gradually fully issued, prices are expected to become more stable and people's interests will be more assured, for example, conditions and regulations for the sale of products formed in the future.

Previously unapproved projects will have a basis for resolution, and many other issues can be resolved, including land use fee calculation, land lease, and social housing development...

The Land Law will help stabilize real estate prices and better ensure people's interests.

The early passage of the law is also expected to provide early support to the market, positively impact the psychology of buyers and investors, and help them feel more confident in their decisions and business and development plans in the near future, according to experts.

Typically, the Law on Real Estate Business also stipulates that investors are only allowed to collect deposits of no more than 5% of the value of the real estate. In addition, deposits are only allowed to be collected in cases where the houses and construction works have met all the conditions for putting into business according to the provisions of the Law on Real Estate Business 2023.

This helps protect buyers from the risk of capital appropriation before completing the necessary legal procedures, giving buyers more time to prepare finances.

At the same time, this regulation contributes to creating more confidence in market transactions.

In addition, in the coming time, with the limited land fund, projects and supply in the city center, the trend of moving to the suburbs will continue to take place strongly, affecting both the apartment and villa/townhouse segments.

For apartments, the demand mostly comes from the middle-income group. The affordability of this group is products under 3 billion, while the Hanoi market does not have many options for this price range.

Therefore, buyers have considered projects located in the suburbs such as Nam Tu Liem, Ha Dong and Gia Lam, which provide up to 93% of the supply of this segment.

For villas/townhouses, by the end of 2024, 13 projects will provide a total of 2,951 units.

Similarly, for villas/townhouses, by the end of 2024, 13 projects will provide a total of 2,951 units, most of which will be in Dong Anh district with 34% of future supply. Ha Dong district follows with 19% and Hoai Duc district with 16%.

Assessing this trend, Ms. Hang explained: "In this context, the city is forced to invest in developing infrastructure around the belt, to reduce the load on the inner city, and to disperse the population to the outskirts.

Currently, there are new urban areas in areas far from the center with synchronous and quality utilities invested in, with an increasing number of transactions, making people more open to moving to these areas.

Demand also comes from people who can work remotely, do not require much travel but can still have synchronous utilities and good landscape infrastructure."

According to the announcement of the Hanoi Department of Transport, there are currently 11 traffic construction investment projects scheduled to start construction in Hanoi. 13 central ministries and agencies will be relocated outside the inner city, concentrated in the West Lake and Me Tri areas.

Source: https://www.nguoiduatin.vn/chuyen-gia-savills-luat-dat-dai-se-dua-thi-truong-nha-o-ha-noi-buoc-vao-chu-ky-moi-204240812154606182.htm