Apartment prices in Hanoi and Ho Chi Minh City continue to increase sharply despite increasing inventory

According to the third quarter housing and real estate market report of Ministry of Construction, the real estate inventory at projects in the third quarter was more than 25.900 products. This inventory is understood as the number of real estate projects that are eligible for transaction according to the provisions of law but have not been traded in the reporting period.

Of which, there are nearly 4.700 apartments in inventory. 12.250 single-family homes in inventory. Nearly 9.000 land plots in inventory. These products are all eligible for sale but have not been traded. Compared to the previous quarter, the real estate inventory has increased by nearly 52%.

Regarding the apartment segment, in the second quarter, there were nearly 3.000 units in inventory, but by the third quarter, it had increased to nearly 4.700 units, an increase of more than 56%. Although inventory increased sharply, the selling price of real estate products on the market continued to increase, especially in Ha Noi and Ho Chi Minh City. 

Specifically, apartment prices in Hanoi and Ho Chi Minh City increased in both new and old projects. On average, primary prices increased by 4-6% quarterly and 22-25% annually. Some areas saw localized price increases of 35-40% in just a few months.

Ms. Nguyen Hoai An - Senior Director of CBRE Vietnam - said that most of the newly launched projects are located in existing urban areas with high prices. In addition, the high selling prices are partly due to the large investment demand, and cash flow is still pouring into products serving real housing needs in the center. Therefore, market liquidity is still maintained positively.

When launching new products, investors will carefully calculate the selling price correlation with the area, so new buildings are unlikely to have lower prices than the previous phase or surrounding projects. This is to ensure the investor's expected profit in the context of increasing material costs.

Assessing the apartment market, Mr. Nguyen Van Dinh - Chairman of the Vietnam Association of Realtors (VARS) - said that in the recent period, apartment prices have increased abnormally, especially in Hanoi. This phenomenon is certainly influenced by interest groups while the economic context, market as well as people's income have not recovered. 

“House prices are rising, but there are no transactions. This could be a trick by an investment group with unclear intentions,” Mr. Dinh frankly assessed.

Ms. Pham Thi Mien – Deputy Director of the Vietnam Real Estate Market Research and Evaluation Institute – said that, in addition to the results from actual supply and demand, the market has also shown signs of “heating up”. This situation is reflected in land speculation, pushing up housing prices, and the emergence of non-transparent real estate transactions. 

Many small investors enter the market for speculative purposes, causing real estate prices to rise unreasonably. Signs of “heating up” are also evident in the apartment segment, with the asking price of transferred apartments increasing, due to the “assistance” of some speculative groups.

The Ministry of Construction stated that recently, some speculative groups, investors and individuals operating in real estate brokerage have disrupted market information to "inflate prices" and "create virtual prices"... These groups take advantage of people's lack of knowledge to manipulate psychology, attracting investment according to crowd psychology for profit.