Apartment prices rise in Hanoi, slide in parts of HCMC

Toan of Hanoi’s Hoai Duc District has been looking to buy an apartment in the city before the Tet holidays, but not had much luck.

For his VND2 billion (US$79,920) budget, it is very hard to find two-bedroom apartments in new projects, he says.

But despite turning their attention to the secondary market and looking for apartments less than five years old in Nam Tu Liem and Ha Dong districts, Toan and his wife have not found anything suitable.

A 70-square-meter apartment in Ha Dong that was priced at VND1.9 billion earlier this year is now listed at VND2.2 billion, he says.

Even in districts like Van Canh and Hoai Duc, a two-bedroom apartment costs VND2.8 billion.

Prices in Dong Anh district, are 8-10% higher than last year.

With prices rising everywhere, Toan has decided to put off his search until after Tet.

A recent survey by VnExpress found that apartment prices have skyrocketed on both the primary and secondary markets in Hanoi this year.

Some upcoming apartment projects to the west of Ring Road 3 are expected to be as expensive as those in inner areas.

A nine-block project announced in the third quarter and to be built at a cost of VND18 trillion is expected to sell for VND66 million per square meter.

The project, whose construction will start from the first quarter of 2024, will have 4,000 units.

New projects in Nam Tu Liem and Cau Giay have experienced the most dramatic price hikes in the city, according to data from property consultancy Cushman & Wakefield.

The secondary market has also seen prices increase. Data from property consultancy CBRE shows they rose in all districts in the third quarter, pushing the average city price to VND32 million per square meter, up 2.7% from the previous quarter.

Hoai Duc and Bac Tu Liem districts saw the biggest year-on-year increases of 8% and 5%, while in Dong Da, Thanh Xuan, Tay Ho, Nam Tu Liem, and Gia Lam they were up 3%.

But in HCMC, in some areas prices have slid by 15-20% since the middle of the year.

Cuong, a real estate broker in Thu Duc City, says many owners have asked him to lower the prices of apartments they have put on sale.

In one instance, a person owning an apartment in an old residential area in District 9 cut the price by 30%, he says.

Prices at some projects that have delayed issue of title deeds for years are down 10-15%, he adds.

Vo Huynh Tuan Kiet, head of marketing at CBRE Vietnam, says HCMC real estate trends and prices usually precede Hanoi by two or three years.

The market entered a hyper-supply phase in 2018 and 2019, when 30,000 new apartments were added each year and the large number of premium offerings pushed average prices to new highs.

Hanoi started seeing a massive expansion of the primary market for the first time in late 2022, he says.

Apartments in certain areas of HCMC have huge demand, especially in Thu Duc City, he says.

On average, when a new project is announced, 70-80% of its units are bought for investment rather than occupation by the owner.

Some use financial leverage to buy apartments before panicking and slashing prices when there is a downturn in the market or interest rates rise, he explains.

On the other hand, there is a balance between buying for investment and occupation in Hanoi.

Dinh Minh Tuan, property listing platform Batdongsan’s southern regional director, says people in Hanoi prefer size over location when buying an apartment.

Thus, they are more likely to choose a bigger apartment on the outskirts for the same price, while in HCMC people would buy a smaller apartment if it is closer to the center, he says.

The consensus among experts is that apartment prices in HCMC have climbed to a point where they have little room to rise further, while the lack of supply in Hanoi continues to push prices up.

"If legal hurdles are not resolved to increase supply on the market, apartment prices in Hanoi might easily climb to match those in HCMC," Kiet concludes.