Apartment prices in Hanoi surge for 15th consecutive quarter

Primary prices for apartments on the Hanoi real estate market have increased for 15 consecutive quarters to reach a level of 53% higher than in the first quarter of 2019, according to Savills Hanoi.

The Savills Hanoi's report on the capital's property market in the third quarter of 2022 was released last week. It showed that the average primary asking price of VND47 million per sq.m increased 5% quarter on quarter and 11% year on year. Limited supply, improving quality and increasing construction costs have driven prices up.

"Apartment prices have trended upward since 2019. However, lengthy legal procedures and slow approvals have limited new supply," Do Thu Hang, senior director, Advisory Services, Savills Hanoi.

Apartments between VND2 billion and VND4 billion represented 85% of stock, increasing from only 15% in 2018. Only 12% of them cost less than VND2 billion. The rest cost more than VND4 billion. 

Given that the average monthly rent is VND15 million per unit and units are sold at an average of VND3 billion, the rental yield is 6%.

In the third quarter, the new supply of 5,353 units increased 235% quarter on quarter and 69% year on year. The new supply came from seven new projects and the next phases of seven existing projects. Grade B had 80%, Grade A had 13% and Grade C had 7%. 

The primary stock of 21,040 units increased by 17% quarter on quarter and 7% year on year. Eighty-five per cent was Grade B, followed by Grade C with 8%.

During the third quarter, there were 3,605 sales, increasing 61% quarter on quarter and 49% year on year. Grade B had 64% of sales. Newly launched projects were 33% absorbed.

Vinhomes Ocean Park and Vinhomes Smart City accounted for 66% of new launches and 55% of sales in the third quarter of 2022, reflecting continued demand for outlying areas.

Hanoi will allocate 1,868 ha to housing development, comprising 1,384ha in urban areas and 484ha in rural areas. 

The city will require 19.69 million sq.m of apartments (or 166,600 units) by 2025 to cater to demand; however, only 70,000 units are expected. Therefore, there is a deficit of 96,600 units between the real supply and the city's plan.

In the fourth quarter of 2022, eight new launches and the next phases of two projects will add 5,033 units. Grade B will have 70%, and 80% will be in Nam Tu Liem, Gia Lam and Thanh Xuan.

Domestic and foreign developers want residential land in satellite provinces, which increasingly meet Hanoi's housing demands. Hung Yen and Bac Ninh will provide approximately 104,800 units from 2022 to 2024 onwards. Improving infrastructure, more affordable products and diverse facilities are key success factors.

Meanwhile, according to data from Batdongsan.com.vn, the transaction of buying and selling real estate for sale was relatively quiet in the third quarter of 2022. Still, the rental real estate market recorded more positive signals.  

The interest from buyers of real estate products in Hanoi decreased by 3% compared to the first quarter of 2022, but the demand for rental properties in Hanoi increased by 58%. 

In HCM City, the interest from customers for the sale and rent of real estate in the third quarter increased by 19% and 70%, respectively, compared to the first quarter of 2022.

Attracting the most interest in renting real estate products in both Hanoi and HCM City markets are apartments. Demand for renting apartments rose 13% in Hanoi and 24% in HCM City. 

Apartment rental prices also increased steadily in many districts. For example, the prices in Tay Ho, Cau Giay, and Nam Tu Liem districts (Hanoi) increased from 14 to 16% compared to the previous quarter. 

HCM City market witnessed a similar trend. Apartment rental prices increased by 14%, 12% and 13% in District 4, District 1 and Binh Thanh District, respectively.

Nguyen Quoc Anh, deputy general director of batdongsan.com.vn, said that the policies of controlling credit in the real estate sector made the market difficult to trade and strongly affected the liquidity of the whole market.

He said the demand for all real estate segments decreased sharply in September. The number of searches decreased by 50% for land plots nationwide, 9% for apartments, 25% for private houses, and 12% for villas and townhouses compared to early 2022. 

Those figures showed that the interest from customers for real estate for sale nationwide continued to decline sharply, he noted.

While investors had been thirsty for capital since the beginning of the year, home buyers also had difficulty accessing banking loans to buy real estate products. 

Anh said that the congestion of capital was the cause of the cool situation on the market. 

According to batdongsan.com.vn's survey for brokers, real estate transactions are facing many difficulties. 

Of this, 36% of surveyed brokers said that the most significant barrier is that customers are afraid of the negative market, so they do not dare to invest in real estate. 

About 23% of them shared that their transaction cannot be successful because customers have difficulty taking banking loans to buy real estate. 

Nineteen per cent of them found that the main obstacle is the price of real estate being too high compared to the financial ability of buyers.