Why can't inner city apartments cool down?

According to experts, waiting for apartment prices to fall is highly unlikely because the supply cannot improve quickly. That's also why new projects about to be launched are seen as a "cooling rain" for the market.

New properties in the city center are still "hot".

In fact, although the "price surge" is no longer as hotly debated as before, the price of inner-city apartments continues to quietly increase, even though they had previously seen increases of several tens of percent in a short period of time.

According to market observers, the scarcity of new apartment projects in Hanoi is the main reason why this segment is becoming increasingly "hot" in both the primary and secondary markets. Each new project about to be launched is likened to a "cooling rain" for the market.

The Sola Park is predicted to become the focal point of the real estate market in the West of the city, given the scarcity of inner-city apartments.

For example, The Sola Park, the newest development under construction in the western part of Hanoi, developed by MIK Group, is attracting the attention of many homebuyers and investors. Strategically located at the gateway to the urban area, the apartments at The Sola Park offer ideal sizes for young families, with a reasonable total price per unit. This is why, since its launch, The Sola Park has received considerable interest from both customers and investors.

Besides The Sola Park, existing projects in the surrounding area have also seen continuous price increases. Simultaneously, resale apartments are always in high demand. For example, apartments at The Mirae Park by MIK Group, which were completed earlier, have seen price increases of nearly 20% since handover. Finding a suitable apartment in this area is also difficult because as soon as an owner posts an ad in the internal group, it's immediately snapped up.

It's hard to dream of a price reduction.

According to Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Real Estate Brokers (VARS), the total supply of new apartments in Hanoi in 2023 reached approximately 11,000 units, equivalent to 66% of the 2022 figure. This downward trend continued in the first quarter of 2024, with only about 3,000 new apartments launched across the entire market. Therefore, from now until 2025, Hanoi will face a shortage of approximately 50,000 apartments.

The inevitable consequence of this scarcity has led to a prolonged price surge in Hanoi's apartment market. A recent report by CBRE indicates that the average price for a new apartment in Hanoi in the first quarter of 2024 increased by 19% compared to the same period last year. However, in reality, the increase is much higher.

Apartment prices are projected to continue rising in the near future.

Currently, a key question for many customers and investors is whether or not they should invest in buying an apartment. Commenting on this issue, Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan.com.vn, said that consumers should clearly define their purpose. Customers buying for residential purposes should make the transaction as soon as their finances allow to meet their practical needs for a stable and secure place to live.

Therefore, according to Mr. Nguyen Quoc Anh's analysis: "Waiting for a sharp drop in apartment prices is highly unlikely at this time because the supply cannot improve quickly. In the near future, when the 2023 Real Estate Business Law comes into effect (expected from August 1, 2024, 5 months earlier than initially planned), the number of developers meeting the requirements to implement projects will further decrease. Meanwhile, the demand for home ownership continues to increase, especially in large cities."

In reality, apartments remain the "perfect choice" for urban residents for many reasons. According to Mr. Tuan, a real estate agent specializing in detached houses, although apartment prices have increased, it pales in comparison to the recent price increase of houses in alleys in Hanoi. He explains that many 3-5 story houses, old houses in alleys, with an area of ​​only about 28-35 square meters, are being offered for sale at 5-6 billion VND per unit, an increase of over 1 billion VND per unit compared to 2023 and about 2 billion VND per unit compared to 2-3 years prior.

According to a market report by Batdongsan.com.vn, during the same period from Q1/2023 to Q2/2024, apartment prices in Hanoi increased by 31%, but detached houses saw an even more significant increase of 32%, and land prices were not far behind with a 19% increase. Meanwhile, the demand for apartments is much higher, which is why apartment projects in the city center have been and will continue to be in high demand.

At the same time, according to data from Batdongsan.com.vn, although apartment prices in Hanoi have increased rapidly recently, they remain the lowest compared to major cities worldwide . For example, in Singapore, apartment prices are 415 million VND/m2, in Hong Kong 645 million VND/m2, in Tokyo 215 million VND/m2, and in Bangkok 162 million VND/m2. Therefore, many market observers believe that the demand for apartments in major cities like Hanoi and Ho Chi Minh City will soon come from foreigners, especially in large-scale projects that have created "international residential areas".

According to Mr. Nguyen Quoc Anh: "It's very difficult to pinpoint the bottom or top of apartment prices. Buyers and investors should clearly define their needs, monitor market conditions, and make decisions when their needs are met. Besides price, they should also research other important factors such as the developer's reputation, location, and amenities to ensure a good quality of life or to guarantee liquidity and effective rental income."

Source: https://baodautu.vn/batdongsan/vi-sao-chung-cu-noi-do-van-chua-the-giam-nhiet-d218226.html