Hanoians turn to old apartments as new ones become unaffordable

By Ngoc Diem   March 14, 2024 | 03:00 pm PT
Hanoians turn to old apartments as new ones become unaffordable
An apartment building that has been in operation for six years in Hanoi's Nam Tu Liem District. Photo by VnExpress/Ngoc Diem
Le Thanh of Hanoi’s Thanh Tri District was surprised when she managed to sell her 66-square-meter apartment for 80% more than what she paid for it in 2016.

She and her husband had bought the two-bedroom unit on Nguyen Xien Street for VND1.8 billion (US$73,000).

Planning to move closer to their child's school in Cau Giay District, the office worker couple told brokers to sell it for them for VND3.3 billion.

Nearly 30 prospective buyers visited the place in less than ten days after the Tet (Lunar New Year) holidays that ended on Feb. 14.

Some even offered to pay the full amount upfront if she reduced the price by VND50 million, but she refused.

She closed a deal a week later. She says: "My neighbor listed their house a month ago and also had many visitors interested in buying. They managed to sell it within a week."

Trung Duc of Hoang Mai District recently sold a 45-square-meter apartment on the 20th floor of a building in the Linh Dam urban area he had bought in 2018 for VND900 million.

Expecting the lack of a title deed to make it hard to sell, he put it on sale two months earlier than his planned moving out date to have more time to find a buyer.

Unexpectedly, he sold it in just two for VND1.4 billion.

He says: "I did not expect my unit, which only came with a purchase contract, to sell so quickly. Overall, I made a profit of 55% of the initial purchase price."

Duc Tuan, a broker in Nam Tu Liem District, says demand for apartments in the secondary market has increased sharply since the end of last year, especially after the deadly fire that broke out in a mini apartment building on Khuong Ha Street and killed 56 people last September.

Since the beginning of this year he has been taking more than 10 people on apartment tours every week.

Many of the units are more than a decade old and several do not have title deeds.

But they still attract interest, mostly from young couples from other provinces looking for cheap housing for their children's education.

Even real estate speculators who had been interested in land and vacation properties are shifting to the apartment segment since it has better liquidity, Tuan says.

"As soon as there is a new listing for an apartment near schools or offices, inquiries flood in."

The director of a property trading floor in Gia Lam District says interest from buyers increased by 50% year-on-year in the first two months of the year.

The segment with prices at VND40-60 million per square meter is the busiest with an average of eight to ten successful transactions a week, many of them in the eastern suburbs.

But his floor has seen a decrease in supply, he says.

"Many apartment owners are either waiting for prices to increase further or pausing their plans to change houses because prices in other segments are also rising."

Thanh says she has been struggling to find an apartment in the inner city area due to the limited availability.

There were only six listings in Cau Giay District, she says.

The rising demand and declining supply have made old apartments much more liquid.

Nguyen Hoai An, a senior director at property consultancy CBRE Hanoi, says the high prices of new apartment projects with, averaging VND53 million per square meter, have driven demand towards the secondary market.

By the end of 2023, prices of new apartments have risen 14.6% from a year ago, she says.

Many new apartments in outer areas are being sold at VND50-70 million per square meter, as high as in the central districts.

So many buyers prefer apartments that are old, she notes.

CBRE data shows that the average price of old apartments, at VND33 million per square meter, is much lower than of new ones.

Do Thu Hang, senior director of the research and advisory department at real estate agency Savills Hanoi, says the number of apartments sold has decreased by 36% a year in 2020-24.

With the average prices of new apartments being 48% higher than on the secondary market, a significant portion of demand has shifted towards the latter segment, she says.

The secondary market also has a wider range of options and clearer legal status, she points out.

Buyers can negotiate prices, especially when sellers are in a hurry, she says.

In the case of people buying to rent out, they can start generating cash flows immediately, she adds.

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