Hanoi apartment prices to remain high on lack of supply, growing demand

They have increased for the last 21 quarters straight to VND59 million (US$2,327) per square meter now, Nguyen Van Dinh, chairman of the Vietnam Association of Realtors, said.

The relentless price rise has not dampened demand.

In the first three months of 2024 around 2,300 new apartments entered the market, with nearly 87% being sold, according to property consultancy CBRE.

While this represented an 11% increase in supply year-on-year, it was admittedly from a low base as new apartment supply had been down 32% year-on-year and to a decade-low in 2023, it said.

There is little land left for new projects in the downtown area, the chairman of housing development company based in Ha Dong District said.

Besides, it is difficult to quickly increase apartment supply since a project usually requires at least five years to be completed and handed over, he added.

This has led analysts to conclude that the prices would remain high in the near future.

Pham Duc Toan, CEO of EZProperty, said the construction of social housing, expected to be the solution for bringing down prices in the market, has been progressing very slowly.

Since late last year only one social housing project with 280 units has entered the market, he said.

As demand far exceeds supply, it is likely that developers who have completed projects would keep prices high to increase profits, he said.

New projects’ prices have been increasing too, he added.

For instance, a project with 4,000 units near Thang Long Avenue has seen apartment prices jump from VND66 million per square meter at the end of last year to VND80 million now.

Pham Thanh Hung, deputy chairman of real estate firm Cen Group, said it is difficult for apartment prices to fall anytime soon due to the high demand as investors shift away from bank deposits due to low interest rates to other asset classes and homebuyers take advantage of low mortgage rates to buy housing.

Not many other property segments in Hanoi can surpass apartments in terms of value, liquidity and ability to generate stable cash flows, and so they would continue to attract buyers, he added.