Hanoi apartment buyers dissuaded as prices soar

The 56-square-meter two-bedroom apartment in the outlying Thanh Tri District now costs VND2.2 billion (US$86,500), well above the VND2 billion the couple had spent years saving up.

Van said she then looked at some old apartments at the Thanh Ha Cienco 5 urban area in Ha Dong District in the inner city, but their prices too have increased by 19-20% in the last three months.

"Prices are too high while many of the apartments do not even have a title deed and are deteriorating, and so my husband and I decided to stop looking for a home."

According to Van, the couple initially planned to buy a two-bedroom apartment in the Dai Thanh urban area in Thanh Tri in 2022 when they had saved around VND600 million.

At the time they could have borrowed just VND400 million and bought the condo, but decided to wait for prices to decline.

They now regret not following through with their plan, which has further delayed their dream of owning a home.

Similarly, Hai, who moved to Hanoi from nearby Yen Bai Province, planned to buy a home soon after getting married so that his small family could settle down.

With a budget of VND1.5 billion, which included money provided by both their families, he and his wife planned to buy an apartment in the Rice City Linh Dam social housing development in Hoang Mai District.

They spoke with several brokers and were shocked to learn that a 58-square-meter two-bedroom unit there that had been built nearly a decade ago cost almost VND2.8 billion, up 40% since the end of 2023 and three times its original price.

"My wife and I will continue to rent for now and wait for housing prices to fall before making any decision," Hai said.

Hai and his wife lives in a rented apartment in a social housing development in Hanoi's Dong Da District. Photo by VnExpress/Ngoc Diem

Hong Quan, a real estate broker in Nam Tu Liem District, said apartment prices have risen considerably since the start of this year, changing weekly or even daily at some projects.

He said several of his clients have stopped looking for homes to buy as they believe the price increases are unreasonable.

A recent poll of more than 7,500 readers by VnExpress found that nearly 40% of them do not want to buy an apartment this year because prices are too high.

A report by the Ministry of Construction said the number of apartment and townhouse transactions in the second quarter fell by 30% from the beginning of the year due to high prices.

Nguyen Hoai An, senior director at CBRE Hanoi, said income growth has not kept up with property prices, making housing more unaffordable in the city.

The average new apartment cost VND64 million per square meter in the third quarter, up 26% from a year ago, with primary market prices increasing by a similar rate to VND46 million.

But the average monthly income of workers in Hanoi only increased by 8% from a year earlier to VND10.7 million, according to the General Statistics Office.

CBRE analysts said apartment prices in Hanoi are comparable to those in the Malaysian capital Kuala Lumpur, while the income per capita is a fourth.

Nguyen Van Dinh, chairman of the Vietnam Association of Realtors, said with prices rising across the board in Hanoi, real estate transactions have been declining because prospective buyers are deeming the price hikes unreasonable.

The solution is to restrict factors driving up property prices and increasing the supply of social housing, he said.

The first can be done through taxes aimed at reducing speculation or encouraging owners to lease or sell their vacant properties, he noted.

The second one is tricky since, while amendments to the Housing Law have made social housing more accessible to the public, supply remains an issue.

Since the beginning of this year no new social housing projects have been started or been completed in Hanoi while only one is under way in HCMC.

Better access to social housing is not very helpful if supply does not improve, he added.