How much are apartment prices increasing?

Although the real estate market has continued to stagnate since the beginning of the year, with many segments showing signs of decline or even "freezing", apartment prices have continued to increase.

4 years, price nearly doubled

Savills Vietnam's report shows that in just the last 4 years, apartment prices have increased by 77%.

Accordingly, in the third quarter of 2023, the average primary price of apartments reached VND54 million/m2, increasing for 19 consecutive quarters and increasing by more than 77% compared to the first quarter of 2019. In other words, the price of an apartment is now almost twice as expensive as at the beginning of 2019.

According to a survey of the Hanoi market, in the past 4 years, many apartment buildings have nearly doubled in price.

For example, a two-bedroom apartment in An Khanh (Hoai Duc district) at the end of 2019 cost 1.1 - 1.2 billion VND but is currently being offered for sale at 1.8 - 2.2 billion VND.

Or a 3-bedroom apartment in Linh Dam (Hoang Mai district) cost about 1.2 billion VND in 2019, but has now increased to nearly 2 billion VND.

The price of apartments in Phap Van area (Hoang Mai district) before 2021 was only about 18 million VND/m2, but now it has increased to over 30 million VND/m2.

A 90 m2 luxury apartment on Minh Khai Street (Hai Ba Trung District) cost about 3 billion VND in 2019, but now it has increased to 5.5 billion VND.

The Ministry of Construction 's report also updated that apartment prices at the end of 2023 are at a very high level.

In Hanoi, in the primary market, the average selling price of newly opened apartments reached about VND50.8 million/m2, up nearly 7% quarterly (about VND3.6 million/m2), 14% annually (about VND7 million/m2).

In the secondary market, the average selling price reached about VND32 million/m2, up 2.7% (about VND800,000/m2) quarterly and 0.8% (VND250,000/m2) annually.

Apartment prices increased for 19 consecutive quarters.

Similarly, in Ho Chi Minh City, the secondary selling price in the third quarter reached VND45 million/m2, up 3% compared to the previous quarter. The increase was mainly in the mid- and high-end segments, especially projects near the center such as Binh Thanh District, Thu Duc City. The primary selling price of apartments reached more than VND60 million/m2.

The Ministry of Construction also said that this is the 19th consecutive quarter that primary apartment prices have increased.

Commenting on the situation of continuously increasing apartment prices, Dr. Nguyen Van Dinh, Vice President of the Vietnam Real Estate Association, President of the Vietnam Real Estate Brokers Association, said that finding an affordable apartment under 30 million VND/m2 in Hanoi or Ho Chi Minh City is currently a really difficult problem.

In 2017 - 2018, with a budget of around 2 billion VND, buyers could own a 55 - 60m2 apartment in districts such as Cau Giay, Thanh Xuan, Hai Ba Trung, but at present, the apartment price level has increased many times.

“ Therefore, with a capital of 2 billion, home buyers will have difficulty finding a new apartment in the city center ,” said Mr. Dinh.

Why do apartment prices keep increasing?

According to Professor Dang Hung Vo, the story of increasing house prices despite the sluggish real estate market is not surprising when the mid-range and high-end segments continue to account for the majority of real estate businesses' sales basket. In addition, the prices of raw materials and labor are increasing steadily every year, so the cost of building a house will also increase accordingly.

Not to mention, a group of speculators, buying and reselling in the secondary market, has caused the price of houses to reach end users to be inflated many times.

Apartment prices nearly doubled after 4 years. (Illustration photo: Zing).

Sharing the same view, Ms. Do Thu Hang, Senior Director, Consulting and Research Department, Savills Hanoi also pointed out that the reason is due to the increase in land prices and construction costs.

In addition, the need to invest in improving the quality of products and surrounding infrastructure and utilities, and internal projects also lead to primary market prices, or prices of newly launched projects, always being higher than the general market level of apartments for sale.

According to Mr. Nguyen Van Dinh, the scarce supply, especially the shortage of low-cost and affordable apartments, has caused prices to increase, combined with the increase in input costs from materials, labor, to land prices, etc., which has had a cumulative impact on apartment prices.

" The housing demand of people in big cities is still very high, while the investment preparation work of real estate projects is taking a long time, making it impossible to immediately meet the supply. Many projects are also stalled due to legal problems, so apartment prices remain high and may increase ," said Mr. Dinh.

Mr. Nguyen The Diep - Vice President of Hanoi Real Estate Club assessed that the current shift in buyer demand is focusing on the apartment segment because this is one of the products with suitable prices for people to pay.

Previously, apartments costing between 2 and 3 billion VND have increased to 4 and 5 billion VND, but people still have the ability to buy.

“ In the context of high demand and low supply, price increases are inevitable, and apartment prices continue to remain very high. For projects under construction and newly opened for sale, the price increase margin will be higher, because investors are under great pressure on input costs. It is forecasted that apartment prices will continue to increase in the coming years. Because the demand is very large but the supply cannot meet it. This demand is created by the urbanization process ,” Mr. Diep analyzed.

Chau Anh

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