Why do housing prices in Hanoi continue to skyrocket?

DNVN - Limited primary supply, high market demand, developed infrastructure and improved quality have driven the increase in real estate prices.

According to the Savills Property Price Index for the fourth quarter of 2023 for the two main markets of Ho Chi Minh City and Hanoi, in Hanoi, the residential real estate price index increased by 3 percentage points quarter-on-quarter to 134.9 points. This figure has increased by 30% since bottoming out at 104.1 points in the third quarter of 2019.

The average price of residential real estate in Hanoi was VND41 million per square meter, up 3% quarter-on-quarter. In addition, limited primary supply, high market demand, developed infrastructure and improved quality have driven the increase in real estate prices.

In Q4 2023, absorption increased to 26%, up 15 ppts QoQ and 12 ppts YoY. New supply accounted for 43% of sales and was absorbed 46%.

Housing demand continues to increase in suburban areas of Hanoi.

Major urban areas accounted for 61% of sales, reflecting continued demand for suburban areas in Hanoi. With consumer confidence improving amid a lack of alternative investment channels, housing demand is expected to recover. In addition, the revised Land Law will facilitate the development of the capital's housing market.

In Ho Chi Minh City, Savills Vietnam said that the residential property price index increased by 2 points quarter-on-quarter to 126 points. Secondary property prices were stable in 12 districts and increased in 4 districts, but decreased by 1 point compared to the same period last year. Primary housing prices returned to the same level as in 2020, at VND69 million/m2 of net area after 3 Grade A projects temporarily suspended sales and withdrew supply.

In Q4/2023, the absorption rate improved by 14 percentage points QoQ and 23 percentage points YoY to reach 40%. The improvement comes from new products with reasonable selling prices from VND3-4 billion/unit, as well as legal completion before launch and long-term payment plans.

According to Savills Vietnam, new supply accounted for 78% of total units sold in the quarter with an absorption rate of 84%, reflecting high demand for products that meet the needs of buyers in Ho Chi Minh City. The inventory group struggled with a modest absorption rate of 14%.

Ha Anh

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