Apartment prices in Hanoi have consistently set new benchmarks in recent years. As of Q1 2024, the average price reached 59 million VND/m2, marking the 21st consecutive quarter of increase.
According to Dr. Le Xuan Nghia, a member of the National Monetary Policy Advisory Council, the Hanoi apartment market is experiencing an imbalance between supply and demand, posing a risk of a "bubble."
Citing the fact that many projects in Hanoi have recorded sharp price increases, with some projects rising by more than 30%, reaching over 100 million VND/m2, Mr. Nghia argued that this is a problem that needs to be addressed, otherwise the apartment segment will sooner or later become uncontrollable.
“ I have warned before that the apartment segment is starting to show signs of a 'bubble,' and it might just become a reality. One day, when supply runs out while demand continues to rise, the supply and demand curves will run parallel, never meeting. There might even be a situation where someone owns a house and could sell it, but they think prices will go up further, so they hoard it instead of selling, while demand continues to increase ,” Mr. Nghia said.
Recently, apartment prices in Hanoi have been continuously rising sharply. (Illustrative image: Minh Duc)
Mr. Vu Cuong Quyet - General Director of Dat Xanh Northern Vietnam - also analyzed: In the fourth quarter of 2023, the prices of apartment projects in Hanoi increased by 5-7%. Following that, in the first quarter of 2024, apartment prices increased further by 6-8%. In the last two quarters alone, the Hanoi apartment market has increased by 10-12%.
" This is a strange phenomenon where apartment prices in Hanoi are being pushed up to high levels in a declining real estate market ," Mr. Quyet emphasized.
According to Mr. Quyet, excessively high apartment prices will exceed people's purchasing power and attract speculators. After a while, these investors and speculators will cut their losses, leading to risks for the market.
A condominium "bubble" forms when prices rise excessively beyond their true value. This phenomenon stems from a sudden surge in demand for real estate while supply remains limited. Seeing this opportunity, speculators pour money into the market to profit, further fueling demand.
Bubbles only stop when they burst. That's when demand declines or stagnates, causing the price of the asset to plummet dramatically, and the market quickly collapses.
Sharing the same view, economist Associate Professor Dr. Dinh Trong Thinh also commented that apartment prices in Hanoi have increased sharply by 30-40% recently, and many developers preparing to launch new projects are also planning to raise selling prices. He warned that this will exacerbate the ongoing housing crisis in the market.
Mr. Thinh suggested that regulatory agencies need to thoroughly remove legal bottlenecks, increase the number of products on the market, and enhance competition. " Social housing and affordable housing are crucial solutions to change the current crisis ," Mr. Thinh said.
According to Ms. Do Thu Hang, Senior Director of Research and Consulting at Savills Hanoi, there are currently minor surges in the apartment segment.
According to Ms. Hang, the supply of apartments continues to be scarce. In the first quarter, the primary supply across the market reached 12,928 units, a 9% increase quarter-on-quarter but a 34% decrease year-on-year. While the supply of apartments has remained low for a long time, on the demand side, in addition to the pent-up demand from people buying homes, the market is also receiving new demand from investors.
Recently, the Ministry of Construction requested the Hanoi People's Committee to inspect and review real estate business transactions, especially in apartment buildings showing signs of unusual price increases.
This will allow for measures to rectify and address acts of price manipulation, speculation, and other violations of real estate business laws (if any).
" The Ministry of Construction requests the Hanoi People's Committee to focus on effectively directing the above-mentioned content and submit a report to the Ministry of Construction before April 20 ," the document stated.
According to the Ministry of Construction, the real estate market has shown signs of improvement. However, recently, the press has reported that in some areas, projects, and apartment complexes, apartments and houses are being sold at unusually high prices; there are instances of price manipulation, speculation, and price gouging.
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