Why old apartments are still sought after by many people

Old apartments without pink books are still "selling like hotcakes"

According to Lao Dong , the housing needs of people in big cities like Ho Chi Minh City and Hanoi are increasing. On the contrary, the number of new apartment projects for sale is increasingly scarce, causing the selling price of this real estate segment to continuously increase in both the primary and secondary markets. Even old apartments that have been used for many years and do not have red books are still sought after by many home buyers.

According to a survey by Lao Dong newspaper, there are still many apartments for sale in Hanoi for around 1.5 billion VND. However, most of them are apartments that have been used for many years or do not have a certificate. For example, an apartment in Sico (My Dinh, Hanoi) is 80 square meters wide, including 2 bedrooms and 2 bathrooms. According to the broker, the apartment can be converted into 3 bedrooms, is airy, the only drawback is that it does not have a certificate. The apartment is being sold for more than 1.6 billion VND, equivalent to just over 20 million VND/m2.

Or a 68m2 apartment at Thanh Ha Cienco 5 (Thanh Oai, Hanoi) is being sold for just over 1.4 billion VND, equivalent to over 20.5 million VND/m2.

Real Estate - Why Old Apartments Are Still Sought After by Many People — The continuous increase in the selling price of new apartments from investors has left many people with real housing needs with no other choice but to look for old apartments. Illustration photo from the internet

Another apartment in Linh Dam (Hoang Mai, Hanoi) measuring 46 square meters is being offered for sale at 1.4 billion VND. According to the broker, this apartment is fully furnished and does not have a certificate, but when the transaction is made, there will be a clear sales contract.

Why?

According to Tien Phong reporter's research, most home buyers with real housing needs are facing difficulties due to limited supply and constantly increasing housing prices.

Real estate prices are rising too high, beyond the affordability of the majority of people, causing market liquidity to continue to decline in the apartment segment.

According to a report by the Ministry of Construction , in the fourth quarter of 2023, apartments priced from VND51-70 million/m2 accounted for 63% of new supply, up 24% year-on-year. Most of the supply in the real estate market today is in the apartment segment priced from VND3.5 to over VND4 billion.

According to the latest report of the Vietnam Real Estate Brokers Association, the primary price (selling price from investors) of apartments is high partly because there are very few investors with projects. Investors with supply at this stage are mostly large investors, not facing financial difficulties, so the asking price is anchored at a high level to maximize profits.

Notably, the market is almost devoid of new projects priced at 40-50 million VND/m2 in Hanoi and Ho Chi Minh City. Apartment projects in neighboring provinces and cities have also recorded prices around 40 million VND/m2. Currently, the average price of primary apartments in Hanoi is 51.7 million VND/m2 and in Ho Chi Minh City is up to 71 million VND/m2.

The price level of primary apartments is difficult to decrease due to input costs (housing index and construction material prices increase by about 6% each year), inflation, and high interest rates. While the number of newly approved commercial housing projects is increasingly scarce, there is not much land left in central areas.

The continuous increase in the selling price of new apartments from investors has left many people with real housing needs without a choice.

According to Ms. Do Thu Hang - Senior Director of Research and Consulting, Savills Hanoi - in the context of limited supply and high primary prices, opportunities for those with real housing needs may lie in the secondary market (buying and selling prices between people). The secondary market has the advantage of being able to buy with many options, suitable for affordability and more secure legality.

According to many experts, the secondary housing market in Hanoi will continue to maintain stable transaction volume thanks to attractive prices, especially in districts outside the inner city area with lower prices than the central area and increasingly complete traffic infrastructure.

In 2024, this trend will continue as real estate supply has not shown any clear signs of improvement and prices continue to rise. Despite many positive signals, the economy in general and the real estate market in particular need more time to recover in terms of both supply and liquidity.

Dao Vu (T/h)

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