Hanoi apartment prices are “hot” due to savings interest rates “falling to the bottom”, the supply is at least within a decade

The latest statistical data from Batdongsan website shows that the price of apartments for sale in Hanoi is now approaching that of Ho Chi Minh City. Specifically, in the first quarter of 2024, the average apartment price in Hanoi will reach 46 million VND/m2, while in Ho Chi Minh City it will be 48 million VND/m2.

Looking back at the picture of the past 6 years, the average price increase rate of Hanoi apartments is up to 70%, exceeding the 55% rate of Ho Chi Minh City. Particularly in the period from 2021 to present, apartment prices in Ho Chi Minh City increased very slowly while apartment prices in Hanoi skyrocketed.

Assessing the price increase of the Hanoi apartment segment, Ms. Duong Thuy Dung, Managing Director of CBRE Vietnam, said that apartment prices in Hanoi increased sharply in the first months of this year because for a long time, Vietnam market in general and Hanoi market in particular is lacking in supplyespecially the supply for real housing needs (affordable, mid-range, close between mid-range and high-end).

CBRE representative also said that the population growth rate and urbanization are high as the number of people returning to Hanoi to study and work increases. Meanwhile, supply and market are very low. In 2023 alone, the total supply of new offerings in the Hanoi market is about 10,000 units, equal to 1/4 of normal times.

“The reason why Hanoi apartment prices were “hot” at the beginning of this year was because Savings interest rates “fell to the bottom”cash flow shifted to real estate, especially the apartment segment,” Ms. Dung said.

Sharing the same opinion, Mr. Nguyen Quoc Anh – Deputy General Director of Batdongsan.com.vn said that in 2024, apartment prices will continue to increase because the supply of apartments is still scarce on the market. This supply is inversely proportional to the increasing demand along with the urbanization process of large cities like Hanoi.

Hanoi’s urbanization rate is about 51%, which means that each year Hanoi needs about 70,000 apartments to solve the housing problem for workers. But real, The supply entering the market is too modest compared to the estimated demand, causing apartment prices to continuously establish new levels.

As a real estate project investor, Mr. Nguyen Quoc Hiep – Chairman of GP. Invest also believes that the recent increase in apartment prices in Hanoi comes from scarce supply, the reason why projects are currently stuck with legal issues. Mr. Hiep also said that from the beginning of the year until now, there have been only 30 projects launched, compared to the previous speed, which is very small, even in the city. HCM only has 1 approved project.

“The reason the apartment segment has skyrocketed in price is due to recent times Legal congestion causes supply to be scarce, while market demand increases sharply. On the other hand, The upward momentum is also compounded by price escalation All of the factors that make up real estate value are compensation costs, site clearance, raw material prices…”, Mr. Hiep said.

Offering a solution to cool down apartment prices, Dr. Nguyen Van Dinh – Chairman of VARS said that the urgent solution to cool down apartment prices today is to promote approval of new projects to increase supply.

“When the Land Law, Housing Law and Real Estate Business Law (amended) have been passed, there needs to be a solution to promote projects soon. In addition to focusing on developing social housing, priority should be given to low-cost commercial housing projects. As long as there are a few thousand low-cost social housing or commercial houses pushed into the market, apartment prices will immediately cool down,” Mr. Dinh said.