Hanoi apartment owners wait for further price hikes to sell

By Ngoc Diem   March 24, 2024 | 03:00 pm PT
Hanoi apartment owners wait for further price hikes to sell
Apartment buildings in the Nam Trung Yen urban area, Hanoi's Cau Giay District. Photo by VnExpress/Ngoc Thanh
Hung planned to sell his Hanoi apartment last month, but after getting offers at 45% higher than his purchase price, he decided to wait for eve higher prices.

The 56-year-old bought his 90-square-meter two-bedroom apartment on Duy Tan Street in Cau Giay District four years ago for VND3.4 billion (US$137,600).

Seeing neighboring units being sold for VND4.9 billion, he concluded it was time to cash in on his property.

Within a week of hiring the services of a real estate agent he received dozens of offers, all of them 40-50% above his purchase price, he said.

Convinced that the apartment's value had not yet peaked, Hung chose to rent it out for VND14 million a month instead of selling it.

He also owns two other apartments in Nam Tu Liem District, both of which appreciated from VND2.8 billion to VND3.9 billion over three years.

"I initially planned to sell some of my apartments to diversify my portfolio, but I am holding off as prices might increase further this year," he said.

Many other apartment owners in Hanoi are doing the same thing.

Ngoc rents out her 60-square-meter apartment in Gia Lam District for VND8 million a month.

She said her tenant offered to buy the apartment for VND2.2 billion, 22% more than the VND1.8 billion she had paid in 2021.

But she was hesitant, saying she could not profitably invest the sale money in other asset classes.

"Gold prices are high while bank deposit interest rates are too low. So keeping the apartment and renting it is the best option for me right now. I would only consider selling it for more than VND3 billion."

A broker who operates mostly in the western part of Hanoi said he has seen many instances of apartment sellers getting cold feet and changing their minds at the last minute.

Most of them own multiple houses and are not under pressure to sell unlike those who have large debts, he said.

He felt many listed their properties for sale just to gauge their value and liquidity.

Since fewer people are willing to sell, the number of apartment listings in the secondary market in inner districts has fallen by 20-30% from a year ago, he said.

With the apartment price rise showing no signs of slowing down, it is understandable that many sellers are having second thoughts.

Real estate trading platform Batdongsan’s February data shows affordable and mid-priced apartments in Hanoi have seen prices increase by 2% this year.

Between 2015 and 2023 prices have risen by over 80%, fueled by growing demand.

Property consultancy CBRE said by the end of 2023 the average price of a new apartment in Hanoi had increased by 14.6% from a year earlier to VND53 million per square meter.

Pham Duc Toan, founder of real estate agency EZ Property, pointed out that Hanoi apartment prices have increased steadily over the last three years in both the primary and secondary markets due to a severe supply shortage.

They have increased by 12-15% even as other property segments remained in a slump, while rental yields have risen by 4-5% a year, he said.

Nguyen Van Dinh, vice president of the Vietnam Association of Realtors, said people used to believe that apartments only bring losses, but in recent years their rising prices and rents have made them a popular investment choice.

Analysts said professional investors should cash in on apartments between five and seven years after purchase when growth in both their prices and rental would start to slow down.

Toan said prices have remained high for long, meaning they do not have too much room to grow, and so using financial leverage would result in low profits.

Apartments priced at VND2-4 billion have seen the biggest appreciation in recent years, he added.

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