Property prices are fluctuating wildly: Will the land fever return?

VTC News•06/04/2024

Since the beginning of the year, real estate prices have been continuously rising sharply, surprising many people, with the two segments experiencing the strongest increases being apartments and land-based houses.

According to data from the Vietnam Real Estate Brokers Association, apartment prices in Hanoi increased by approximately 38% in early 2024 compared to 2019. In Ho Chi Minh City, prices in this segment increased by 16%.

Also highlighting the rising apartment prices, a report by PropertyGuru Vietnam shows that in the first quarter of 2024, the average price of apartments in Hanoi was 46 million VND/m2, a 17% increase compared to the same period last year.

Market surveys easily reveal that apartment prices are constantly being adjusted upwards.

Mr. Tran Van Liem (Hoang Mai district, Hanoi) reported that at the end of 2023, he and his wife were quoted a price of 2.7 billion VND for a 70m2 apartment on Ngoc Hoi Street (Hoang Mai district). However, by early 2024, the price had increased to 2.9 billion VND, and now it has further increased by 200 million VND, reaching 3.1 billion VND, leaving Mr. Liem astonished.

" Currently, apartments with similar location and size to this one are being offered for sale at 3-3.1 billion VND. I'm very surprised that apartment prices are increasing every month, rising by hundreds of millions of VND ," he said.

Similarly, Ms. Tran Nguyet Minh (Ha Dong, Hanoi) also made a profit of 200 million VND after just a few months of investing in an apartment. In December 2023, she bought an apartment in Linh Dam (Hoang Mai district, Hanoi) with the intention of "flipping" the market. At the time of purchase, the price of the 60m2 apartment was 2.6 billion VND. But by January 2024, her apartment had been offered for resale by a real estate agent for 2.7 billion VND, and now the agent is willing to pay 2.9 billion VND.

Experts predict that a real estate bubble is unlikely to occur in 2024. (Illustrative image)

Not only apartments, but also land and house prices, especially those in alleyways, are skyrocketing. A report by PropertyGuru Vietnam indicates that the land and house market in Hanoi will continue to experience growth in 2024. Specifically, detached houses in Tay Ho district saw the strongest price increase at 9%. Other districts such as Dong Da, Ha Dong, Hai Ba Trung, and Hoang Mai also saw increases of 4-8%.

Despite the sharp price increase, trading volume remains very high, making the market increasingly heated.

Experts: Land speculation is unlikely to return.

Rapid price increases and a renewed boom in the real estate market are leading many to predict a new land price surge similar to that of 2021 could occur.

However, according to experts, this is not a cause for concern, as the market has become much more transparent than before.

Some segments of the real estate market that have seen recent price increases are not experiencing a real estate bubble. (Illustrative image)

Mr. Pham Duc Toan, CEO of EZ Property Investment and Development Joint Stock Company, believes that the "bottom" of the real estate market can be identified as the second and third quarters of 2023. The recovery followed, amidst a sharp decline in bank interest rates. The effect of low interest rates extended into the first quarter of 2024, prompting investors to withdraw their money and invest instead of depositing it in banks.

However, that doesn't mean the market will experience a boom. " I don't see a 'land fever' in the short and medium term. Recent government actions, such as the draft tax on second homes and the restriction on transactions of 5 properties, all show that investment will become increasingly restricted, instead of being as easy as before ," he said.

Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, also believes that the recent price increases in some segments of the real estate market are not a land bubble but rather an abnormal, localized phenomenon.

" In the context of a real estate market that has not fully recovered, with projects still stalled and people and businesses facing many difficulties…the fact that prices are still rising, and rising in areas without new projects, is abnormal ," Mr. Dinh stated.

Explaining the reason for this "anomaly," Mr. Dinh said that for the past two years, investors have had no investment opportunities due to a lack of supply. This may have led some businesses and brokers to create false information about prices and infrastructure, causing the market to overheat, but that's not the case. The purpose is to stimulate investors to put money into the market.

" Experienced and knowledgeable investors rarely get involved in this, but those lacking in-depth knowledge are easily swept along by this trend. In the context of a difficult economy , if land prices suddenly rise without significant investment in that area, one should immediately suspect that it is an artificial price manipulation that does not follow the rules, " Mr. Dinh emphasized.

Meanwhile, from the perspective of the project developer, Mr. Nguyen Anh Que, Chairman of G6 Group, also believes that the rising price of apartments does not mean it cannot decrease.

As evidence, in the past, during the period of 2008-2010, there were apartment projects priced at 50-70 million VND/m2. However, by 2011-2013, when affordable commercial housing projects appeared on the market, apartment prices immediately cooled down.

Therefore, the G6 Group representative predicted that if the old scenario repeats itself, house prices could fall from 2026. The reason is that housing projects in general, and social housing projects in particular, will begin to complete the necessary procedures, increasing supply in about a year afterward, helping to cool down house prices.

Chau Anh

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