Hanoi apartment owners sell in haste, repent at leisure as prices keep rising

By Phan Duong   March 17, 2024 | 03:28 pm PT
In 2023 Tran Trung Quan and his wife sold their apartment in Ha Dong District in Hanoi at a 100% profit. However, its steady increase in price since then.

Their struggle to buy a new house have left them with little to rejoice over. Quan, 38, a mechanic, says: "I thought the price was already at its peak, would drop if we didn't sell quickly, and we would lose the opportunity to change houses."

Two years ago the couple bought a 69-square-meter apartment for over VND1 billion (US$40,550). Within a year apartment prices in the area had doubled. Many families sold theirs for profits of billions of dong, and used the money to buy a townhouse or apartment. Weary of commuting nearly 20 km to work every day, Quan chose the latter option.

"The price got me really excited. Many people around us were selling, and brokers were constantly calling."

After selling their apartment, Quan and his wife began looking for a new one. But the prices of projects that met their criteria had also risen.

Meanwhile, the value of their old apartment increased by VND100 million just over a month later. By the beginning of March 2024 a neighbor's apartment sold for VND300 million higher than theirs.

"From that day on, my wife kept complaining because we missed out on a lot of profit," he says.

The Co Nhue 1 apartment complex in Bac Tu Liem District, Hanoi. Photo by Phan Duong

The Co Nhue 1 apartment complex in Bac Tu Liem District, Hanoi. Photo by Phan Duong

The family of Vu Van Trung, 42, who sold their apartment in Mo Lao, Ha Dong District, faces an even more regrettable situation.

His 73-sq.m mid-level apartment in a beautiful location fetched VND3.2 billion two weeks before Lunar New Year.

"A month later the price rose by VND400 million," he says regretfully. "Apartment prices are skyrocketing at an unprecedented rate. I work in the construction industry, and I still find it shocking".

For the past week many people have shared similar experiences on groups and forums on social media. At least six people shared stories about selling their apartments and getting into a difficult situation.

One person said they decided to sell their apartment quickly in the middle of last year after prices increased rapidly.

They then rented a place while waiting for the opportunity to buy a new place. But two months later, following a sudden price surge, they resorted to buying a similar apartment in the same neighborhood, paying VND400 million more than they had got for theirs.

Another person shared their story of selling their apartment to buy a house in Hoai Duc. Now, due to the long daily commute of more than two hours, people in the family are getting exhausted and often bicker with each other.

The money they plan to spend on the house is no longer enough to buy an apartment near the city center.

"A family in my area sold their apartment in the middle of 2023 and paid for a larger apartment that was under construction," a forum member said.

"Getting a loan of VND1 billion, they managed to pay 95% of the apartment price. Unfortunately, construction was suspended. Now they live in a rented accommodation and have to pay loan interest every month. The prices of apartments sold in 2023 have increased by 20-30% this year."

Nguyen Manh Quang, 34, a real estate professional in Long Bien District, says the prices of most apartments in the area have increased by 30-40% from a year ago.

Prices have been skyrocketing especially since Tet, causing many people who had sold their apartments to regret it.

A report on the real estate market in early 2024 by American financial firm NetCredit said apartment prices in inner-city Hanoi increased by 77% in the past year.

The apartment market is experiencing a supply shortage, with the majority of new products being in the high-end segment.

This widening gap between supply and demand is pushing prices to new heights.

The Vietnam Association of Realtors (VARS) predicts primary market will rise by 3-8% in 2024.

"Apartment prices are growing in double digits each year. In 2023 alone, the price index of apartments in Hanoi rose by 16% compared to the beginning of the year," said Nguyen Van Dinh, Chairman of VARS. (every para has a different growth figure! Reconcile them with explanations or delete all)

Robert Linh, vice president of a Hanoi-based real estate company, says there is no definitive answer for the best time to sell an apartment.

The decision should depend on the homeowner's desired rate of return, and it should be the right time to sell once the expectation is met.

In any investment, the timing profit-taking is always very challenging, he says. Selling at a high price and then buying at a higher price afterwards does not equate to profits, and smart investors buy properties at very low prices after selling, he points out.

"Most people are investing rather ineffectively. For example, they would sell a property for VND3 billion, making a profit of VND1 billion, and then buy a property worth VND4 billion. "Considering cash flows and interest expenses, plus the cost of inflation, it is not a good investment."

"It is important to be very alert at this point, especially those who want to change their living place. You should only sell your current apartment if you have found a new one," he says.

"Don’t sell your property and deposit the money in a bank. Savings interest rates are currently low and for sure cannot compete with the appreciation in apartment prices."

Investor Le Quoc Kien says if people are satisfied with their current living environment, there is no need to rush to sell.

"You should not sell your apartment before deciding on a new place."

But it is not easy to take advantage of this period of surging prices. It requires a lot of knowledge and experience in real estate along with financial understanding to arrange cash flows effectively.

More than three months after selling their apartment Quan's family is renting an apartment in Nam Tu Liem District, which is both near his wife's workplace and four kilometers from his own. Despite his wife's nagging, he says he is a happy man since his family’s assets increased and he also gets to live close to his workplace.

"I consider myself lucky. We lived in the old apartment for more than two years, and ended up earning an extra VND1 billion. We did not lose anything".

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