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| Over the next 2-3 years, the real estate market will become clearer with significant changes, including price fluctuations and adjustments in demand from both investors and homebuyers. (Photo: Anh Phuong) |
Despite increased supply, real estate prices are unlikely to fall.
The supply of new apartments in 2024 is expected to reach approximately 35,000 units, higher than the previous forecast of 22,000-24,000 units. In 2025, this number is projected to increase to 40,000 apartments for both major markets of Hanoi and Ho Chi Minh City. However, experts generally agree that even with a significant increase in supply, it will still be difficult to cool down real estate prices.
Forecasting the real estate market in 2025, CBRE Vietnam CEO Duong Thuy Dung believes that house prices will not fall but will no longer increase as rapidly as in the recent period. The increase could be between 5-8% compared to 2024. How to achieve prices that are affordable for the average person remains a difficult question and a major challenge for the market, the answer of which is currently unknown.
According to Ms. Dung's analysis, the apartment price index in Hanoi increased by 64% compared to the second quarter of 2019, double the increase in Ho Chi Minh City. The average primary selling price is approaching 60 million VND/m2.
Concurring with this view, Associate Professor Dr. Dinh Trong Thinh - an economic expert - commented that 2024 was a time when the Hanoi apartment segment witnessed a rapid and remarkable increase in prices. Apartment prices, which averaged 40 million VND/m2 in 2022, rose to over 70 million VND/m2 by the end of the third quarter of 2024. Notably, the market no longer has projects priced below 60 million VND/m2, and many mid-range projects even have prices above 100 million VND/m2.
During periods of intense demand, selling prices tend to increase daily or weekly, but liquidity remains high. The pent-up demand for housing, both for living and investment, has finally erupted as various factors restore confidence among customers and investors in the market. This surge in demand, coupled with a continued scarcity of supply, has driven prices higher.
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Experts believe that although the upward trend in Hanoi's apartment prices has slowed, it will be difficult to bring down selling prices in 2025 due to rising land costs. In fact, the Hanoi market is following the same growth scenario as Ho Chi Minh City. In the next 2-3 years, the real estate market will become clearer with significant changes, including price fluctuations and adjustments in demand from both investors and homebuyers. It is predicted that the entire primary supply in Hanoi in 2025 will belong to the high-end and luxury segments; with luxury accounting for 36%.
From a business perspective, Mr. Ngo Huu Truong, Deputy General Director of Hung Thinh Group, believes that real estate prices will be very difficult to decrease in the coming period. One of the reasons stems from the fact that the project approval process often takes a considerable amount of time, increasing investment costs.
Regarding real estate prices, Nguyen Van Dinh, Vice Chairman of the Vietnam Real Estate Association, also commented that from now until the end of 2025, the regulations of the new law have not been fully applied, and existing regulations are still being utilized. Therefore, land prices are predicted to remain at a reasonable level. However, in the period of 2026-2027, if no appropriate adjustments are made between now and then, more pressure will be added to prices.
According to Mr. Dinh, there are two scenarios for the real estate market. If properly regulated, the market will remain stable in 2026-2027. However, if there are no proper technical adjustments, real estate prices could be pushed to higher, more unreasonable levels. In that case, the market will face difficulties again.
The market has passed its most difficult phase.
The Ministry of Construction has just announced 10 key highlights of the construction industry in 2024. Among them, 2024 marks a significant growth rate of approximately 7.8-8.2%, the highest since 2020, exceeding the target set by the Government in Resolution No. 01 (6.4-7.3%).
This is also the highest growth rate achieved by the construction industry since 2020, driving the overall GDP growth of the economy. The urbanization rate reached 44.3%, exceeding the target of 43.7% set by the National Assembly. The construction industry also achieved two other targets assigned by the Government, including: a wastewater collection and treatment rate of 18% and an average housing area of 26.5 m2 per person nationwide.
Assessing the real estate market over the past year, the Ministry of Construction stated that many comprehensive solutions have been implemented to address market difficulties. The Prime Minister's task force on resolving difficulties and obstacles in real estate project implementation has worked with localities and real estate businesses to gather information and assess the situation, reviewing each specific project to provide guidance, solutions, and address difficulties and obstacles in implementation.
"The real estate market has seen positive changes, overcoming the most difficult period to gain momentum for recovery and development," the Ministry of Construction emphasized.
Another highlight of the past year was the particular attention paid to the development of social housing. On May 24th, the Party Central Committee issued Directive No. 34 on strengthening the Party's leadership over the development of social housing in the new situation.
The Ministry of Construction is submitting to the Government a draft Resolution on preferential capital sources for social housing development. Accordingly, it proposes implementing a preferential loan package of 100,000 billion VND for social housing from bond capital, applicable for 5 years. These efforts will be the foundation for accelerating the development of social housing nationwide in the coming period.
Impact of Hanoi's new land price list.
According to the recently issued and effective land price list for Hanoi, effective from December 20, 2024, land prices in some areas of Hanoi are 2-6 times higher than the land price list issued in 2019. The highest land prices are found on some streets in Hoan Kiem district, reaching nearly 700 million VND/m2.
Some believe that Hanoi's implementation of the new land price list could lead to a further increase in housing prices.
A report by the Ministry of Construction indicates that if the 2024 land price list is applied, the land use costs for real estate projects will increase significantly compared to before. The reason is that the main components affecting housing and real estate prices include: land compensation and clearance costs, land use fees, project construction costs (such as housing and real estate), taxes, and related fees.
In particular, land use fees typically account for a large proportion of the total cost of a housing project, ranging from 7-20% for high-rise apartment projects and 25-50% for villa and townhouse projects.
According to the Ministry of Construction, the application of the new land price list will have a ripple effect, triggering a 15-20% increase in real estate and housing prices compared to before.
Mr. Vu Cuong Quyet, General Director of Dat Xanh Northern Vietnam, said that for businesses, having a land price list will support the process of land valuation to closely reflect market prices. The adjusted land price list is an important basis for businesses to determine land tax.
However, if land tax is determined based on market value, the land-use conversion tax for businesses will be higher, resulting in a higher selling price of real estate to buyers.
Is it permissible to sell an apartment that is still being paid for in installments under the new regulations?
Buying an apartment on installments is a popular trend for many people who want to own a home without paying a large sum upfront. So, what regulations need to be met when buying an apartment on installments?
The purchase and sale of apartments through deferred or installment payments is regulated in Article 167 of the 2023 Housing Law as follows:
- As agreed upon by the parties and clearly stated in the housing purchase contract.
- While the apartment is being paid for in installments, the buyer has the right to use and is responsible for its maintenance, unless otherwise agreed upon or within the apartment's warranty period.
Specifically, Clause 2 of Article 167 of the 2023 Housing Law affirms that: Buyers of housing who pay in installments or deferred payments may only conduct transactions such as buying, selling, gifting, exchanging, mortgaging, or contributing capital to this housing with others after they have paid the full purchase price, unless the parties have agreed otherwise.
According to this regulation, if a buyer of an apartment who is paying in installments wants to sell it to someone else, they are required to pay the seller the full purchase price, unless the parties have agreed otherwise.
Therefore, if you buy an apartment through a payment plan with the developer or an installment plan with the seller, you are only allowed to sell it to someone else after paying the full purchase price, unless the parties have agreed otherwise.
Similarly, when mortgaging an apartment for a bank installment loan, if the mortgagor wishes to sell it to someone else, according to Clause 5, Article 321 of the 2015 Civil Code, the mortgagor may sell the apartment mortgaged to the bank to another person if the bank agrees or as stipulated by law.
Accordingly, if the parties agree or the bank agrees to sell the apartment that is being paid for in installments, the following methods can be used:
- The developer signed the document transferring the apartment purchase contract before submitting the application for a Certificate of Ownership to the State authorities.
- The parties will cancel the old installment purchase contract for the apartment, and the seller will directly sign a new apartment purchase contract with the new buyer (if the old buyer has not yet transferred the ownership certificate) or create a written agreement on the sale of the apartment under installment payments between the three parties: the old buyer, the seller, and the new buyer.
- Establish a tripartite agreement between the bank, the buyer, and the seller, whereby the bank agrees to sell the apartment being paid for in installments to another party. Simultaneously, release the mortgage, sign a new sales contract, and transfer the ownership title (Red Book) to the new buyer.
In this case, the parties may transfer the bank's loan obligations to another party in accordance with Article 370 of the 2015 Civil Code.
Therefore, the buyer can sell the apartment while it is still being paid for in installments if the seller agrees, as analyzed above, or when all installment payments have been made, or as agreed upon by both parties.
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