According to the Q1 2024 real estate market report by PropertyGuru Vietnam, apartment prices continued their upward trend in the first quarter. After six years, the average price increase for apartments in Hanoi reached 70%.
At the beginning of 2018, the asking price for apartments in Hanoi and Ho Chi Minh City was 27 and 31 million VND/m2 respectively. After 6 years, the average price increase of apartments in Hanoi reached 70%, surpassing even Ho Chi Minh City (which saw a 55% increase).
According to a report by PropertyGuru Vietnam, apartment prices in Ho Chi Minh City also continued to increase by 2-5% compared to the same period in 2023.
Specifically, the asking price for high-end apartments in Ho Chi Minh City (prices above 55 million VND/m2) increased by 5%; and for mid-range apartments (prices between 35-55 million VND/m2), it increased by 2% compared to the same period in 2023.
Apartment prices in the centers of major cities continue to maintain an upward trend (Photo: Cong Hieu).
According to experts, house prices cannot keep rising indefinitely. If the scenario from over 10 years ago repeats itself, where affordable housing projects increase and the supply-demand balance is restored, then house prices will fall.
Mr. Nguyen Anh Que, Chairman of G6 Group, believes that the reasons for the increase in apartment prices, besides rising input costs, also stem from businesses being bogged down by too many legal procedures, leading to delays and supply failing to meet demand.
However, according to Mr. Que, the rising price of apartments does not mean it cannot fall. As evidence, in the past, during the period of 2008-2010, there were apartment projects priced at 50-70 million VND/m2. But by 2011-2013, when affordable commercial housing projects appeared on the market, averaging 11-15 million VND/m2, apartment prices immediately cooled down.
For example, in 2010, the Indochina Plaza apartment project on Xuan Thuy Street (Cau Giay District, Hanoi) had an average selling price of 50-60 million VND/m2. But by 2013, when supply increased, the price of many apartments in this area had dropped to only 30-35 million VND/m2. After more than 10 years, the price of apartments here is now around 100 million VND/m2.
Given the current developments, the G6 Group representative predicts that if the old scenario repeats itself, house prices could fall from 2026. This is because housing projects in general, and social housing projects in particular, will begin to finalize procedures, increasing supply within about a year afterward and helping to cool down house prices.
According to the Vietnam Association of Real Estate Brokers (VARS), after a long period of decline, the supply of apartments in Hanoi and Ho Chi Minh City is expected to increase again, thanks to the market recovery and the efforts of state management agencies to remove legal obstacles for projects.
In particular, the supply of social housing and housing for workers will be launched onto the market in the near future. However, the supply from these products requires time to complete legal procedures before being put on the market and mainly comes from areas far from the city center.
Therefore, VARS forecasts that, in the short term, apartment prices in the centers of major cities will continue to maintain their upward trend, especially in the affordable and mid-range segments. Meanwhile, the resale prices of high-end and luxury projects may see a slight decrease.
However, by mid-2025, when legal documents related to the real estate sector come into effect, easing difficulties for developers and buyers of social housing and housing for workers, housing prices may cool down.
" The supply of social housing will increase, and apartment prices will fall to a level more suitable for people with real housing needs ," VARS predicts.
According to Ms. Duong Thuy Dung, Senior Director of CBRE Vietnam, apartment prices cannot increase indefinitely; they will only rise until they reach a "tolerance limit" and the affordability of homebuyers.
Many experts predict that house prices will fall from mid-2025.
According to Ms. Dung, the clearest evidence of this reality is that apartment prices in Ho Chi Minh City, after continuously increasing from 2017-2019 and reaching a peak, have stabilized and leveled off in 2022.
"Apartment prices in Ho Chi Minh City have reached a point where people can no longer afford them," Ms. Dung commented.
Regarding the Hanoi apartment market, Ms. Dung believes that prices will continue to rise until they reach an average price of 100-200 million VND/m2, at which point they will be forced to stop.
" Of course, this price increase will depend on the location and quality of each project. Projects currently priced at 70 million VND/m2 will continue to increase until they reach 100-120 million VND/m2. Projects currently priced at 30-40 million VND/m2 could increase to 50-60 million VND/m2 depending on the quality of the apartment and the reputation of the developer ," Ms. Dung said.
In addition, according to experts, when the Land Law comes into effect, the supply of housing will increase and then housing prices will cool down.
Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), emphasized that the early implementation of the 2024 Land Law, half a year ahead of schedule, will boost the market's supply, thereby driving down housing prices.
Recently, the prolonged shortage of apartment supply has caused Hanoi's apartment prices to skyrocket, even in suburban areas where asking prices are as high as 60-70 million VND/m², comparable to land plots. In the city center, some projects are priced at nearly 300 million VND/m².
According to research by PropertyGuru Vietnam, recent new projects only contribute about 20,000 - 30,000 apartments per year, while the typical demand is as high as 70,000 - 80,000 apartments per year.
Sharing the same view, Dr. Nguyen Van Dinh, Chairman of the Vietnam Association of Real Estate Brokers (VARS), further analyzed: The early implementation of the Land Law will help many projects resolve obstacles and be completed sooner. This will increase the supply to the market, contributing to reducing the current supply-demand pressure. House prices will gradually decrease to a more reasonable level, more in line with people's incomes.
Furthermore, when developers have easier access to land, the cost of project development also has the potential to decrease thanks to a shortened legal completion process. The selling price of the product can also be adjusted.
Source
Comment (0)