Difficult to slow down the increase in apartment prices in Hanoi

Apartment prices in Hanoi have increased by 20-30% over the past year. Apartment prices are even predicted to continue to “dance” in the near future.

 

Apartment prices in Hanoi are increasing sharply and are expected to continue to increase in the near future. Photo: Thanh Vu

Prices continue to hit new highs

VND56 million/m2 is the average price for a new apartment in Hanoi, calculated as of the first quarter of 2024. According to CBRE, this figure has increased by 19% compared to the same period last year. However, in reality, the increase can be much larger.

For example, in 2023, apartments at Masteri West Heights Project were advertised for sale by brokers at VND51 million/m2, but now they have increased to VND62 million/m2 (up 22%). Another project, Moonlight 1 An Lac, had a selling price of only about VND30 million/m2 last year, but now it has jumped to VND50 million/m2 (up 67%).

In the primary market, apartment prices have also continuously reached new peaks. After only about a year, the price of apartments at Royal City has increased from 47 million VND/m2 to 63 million VND/m2 (an increase of 34%). Even HH1 Linh Dam - a project embroiled in legal disputes - has witnessed a "galloping" increase, from 24 million VND/m2 to 31 million VND/m2 (an increase of 29%).

“Expecting a decrease in apartment prices is impossible.” This is the statement of Mr. Pham Thanh Hung, Vice Chairman of the Board of Directors of Cen Group, in a discussion about the apartment segment.

Not only Mr. Hung, many experts and business leaders also share the same opinion that investors will find it difficult to reduce product prices in the near future.

Expecting apartment prices to fall is impossible

Mr. Pham Thanh Hung, Vice Chairman of the Board of Directors of Cen Group Corporation

According to the Vietnam Association of Realtors (VARS), one of the reasons for the high price of apartments is the scarcity of supply. Investors who have available products have taken advantage of this period to increase the selling price, thereby maximizing profits. In addition, input costs such as land use fees, construction material prices, labor costs, etc. are also increasing, making it difficult for housing prices to "cool down".

In addition, the average price of VND56 million/m2 is also the result of a large difference in segment structure. According to CBRE, this year, Hanoi is expected to welcome 12,000 new apartments for sale, an increase of nearly 20% compared to 2023. However, the supply will only be concentrated in the high-end segment. On the other hand, the affordable and low-cost segment will almost be "extinct". This could cause the average apartment price to increase by 10% compared to 2023.

Sharing with Dau Tu Newspaper reporters, a business leader said that investors always prioritize high-end or mid-range projects, because the profits are always many times higher than those of low-cost, popular projects. The market shows that even when apartment prices increase, the absorption rate of this segment is still very good, despite the market's ups and downs. Therefore, investors still do not have enough "motivation" to launch apartments priced under 40 million VND/m2.

Find ways to "cool down" apartment buildings

The lack of new projects is the cause of the “fever” in the apartment segment. The main cause of this shortage is the legal factor. According to Dr. Vu Dinh Anh, this problem accounts for 70% of the difficulties of the real estate industry.

“Detecting the disease” of the apartment segment, the Prime Minister ’s working group worked directly with the Hanoi People’s Committee and many real estate businesses to grasp and remove difficulties and legal problems. The above efforts have been partly rewarded, when 404 projects in the city have been cleared of obstacles. However, Hanoi still has 246 projects “in line”, waiting to be processed.

Not stopping there, the management agency and businesses are still having a headache with the problem of land valuation. Many units are hesitant, delaying, even avoiding participating in the valuation work, which inadvertently affects the process of site clearance and project development.

In the 31st Session of the National Assembly Standing Committee, many delegates reflected on the situation that, after witnessing some valuation companies being handled for violations, many businesses in the industry were afraid of risks and refused to appraise land prices.

In terms of segment structure, the plan to develop 1 million social housing units nationwide in the 2021-2030 period is a drastic move by the Government to bring the low-cost segment back onto the real estate map. However, the progress of the plan's implementation is a matter of concern. According to the Ministry of Construction, Hanoi is one of the localities with a low number of social housing registrations in 2024, with only 1,181 units, one-third of that of Ho Chi Minh City.

According to leaders of many large real estate companies, such as Vinhomes, Viglacera, and Hoang Quan, the approval process for investment in social housing construction is still more complicated and takes more time than commercial housing projects. Meanwhile, the maximum profit that businesses receive is only 10%.

It can be seen that all the above difficulties stem from shortcomings in policies. This is the reason why the Prime Minister directed ministries and branches to urgently develop detailed guidance documents and submit them to the National Assembly for consideration to allow the 2024 Land Law to take effect from July 1, 6 months earlier than expected. The Housing Law and the Real Estate Business Law will officially enter the market from January 1, 2025.

Not only that, Hanoi is also finding its own way to solve the housing problem. In the context of exhausted inner-city land funds, the City People's Council has approved the Capital Planning Project for the period 2021 - 2030, with a vision to 2050. Notably, the orientation to build 4 subordinate cities is noteworthy.

This plan will create specific mechanisms and policies so that localities can accelerate the development of technical and social infrastructure, thereby attracting people to move in. When demand in the inner city decreases, the apartment price level will be adjusted according to market supply and demand.

However, in the immediate future, according to Savills, in the period 2023 - 2025, Hanoi will lack about 70,300 houses. When the above situation is not resolved, the expectation of a decrease in apartment prices is impossible.

Source: https://baodautu.vn/batdongsan/kho-ham-da-tang-gia-chung-cu-tai-ha-noi-d214245.html