How $40,000 apartments disappear from Hanoi in 10 years

Over a decade ago Minh Anh’s family bought a 75-square-meter two-bedroom apartment in Ha Dong District for VND970 million, or around VND13 million per square meter.

For the same amount they had many other options with a minimum of 60 square meters in other districts.

This was because in 2014 the affordable segment (with prices under VND35 million per square meter) accounted for almost 40% of new supply.

In 2016 some developers of affordable apartments had to organize lotteries to select buyers due to high demand.

But gradually the affordable segment shrank as developers switched to mid- and high-priced projects for higher margins.

By 2022 the affordable segment only accounted for 3% of new supply, while the mid-priced segment had grown to 83%, according to property consultancy CBRE Vietnam.

By the first half this year the affordable segment had completely disappeared, as no apartment under VND35 million per square meter was launched.

Between 2014 and 2023 Vietnam's inflation went up by an average of 2.87% a year, according to data tracker Statista.

VnExpress data shows that in the western area of Hanoi, a homebuyer with VND1 billion can only afford half a studio of 28-32 square meters.

Developers now sell a studio at around VND1.6-2 billion. Units with one bedroom are priced around VND2.5 billion.

Demand for cheap apartments, however, remains high. A survey of 3,100 VnExpress readers last month showed that 52% of them were only able to afford apartments priced under VND2 billion.

The declining supply in the affordable segment will likely continue, as the high-end segment (priced VND60-120 million per square meter) accounted for nearly 70% of new supply in the first nine months.

There has been almost no new apartment priced under VND50 million per square meter in the capital since the second quarter.

For buyers who are willing to increase their budget to VND3 billion, the best option they can afford is a new one-bedroom downtown, or a used one in the outskirt.

Going through the roof

With rising land price and construction costs, Hanoi apartment prices have been surging in the last four years.

The average price on the primary market (where developers sell directly to buyers) has tripled in the last 10 years to reach VND64 million in the third quarter, according to CBRE.

Nguyen Hoai An, senior director of CBRE Hanoi, said that in 2019 and before, Hanoi apartment prices rose only 10% a year, as apartments became more popular among local residents who used to prefer houses for long-term stability.

The entrance of new developers, both domestic and foreign, meant that new projects mushroomed across the city.

Analysts from Vietnam Association of Realtors (VARS) said that apartments have proven to be a reliable investment asset with prices increasing steadily, even when land and house prices were frozen in some areas.

Pham Thi Mien, a representative of VARS, said that apartment prices continue to rise even now, reaching VND90 million per square meters at some projects, but still buyers are willing to pay.

Industry insiders expect the trend to continue, as some developers are already selling luxury apartments at VND200 million per square meter, same as townhouses in the outskirt.

Although 50,000 new apartments are set to be launched in the city in the next two years, there is no guarantee that prices will go down, as around 70% of them are expected to be in the high-end segment.