Amid forecasts of rising real estate prices after new land-related laws take effect, many people are hastening to finalize home purchases despite high prices.
Buyers Accept "Peak Prices" Fearing Further Increases
Since late last year, apartment prices have surged rapidly, creating a “price fever” in the market. The increase has affected not only new projects but also pre-owned ones. While the fever has “cooled down” somewhat, prices remain high.
Ms. Hiền, an office worker in Hanoi, recently purchased a 50m² apartment in Vinhomes Smart City for VND 2.5 billion. Despite knowing that prices are at their peak, she and her husband decided to take out an additional VND 800 million bank loan to buy the apartment, fearing prices might rise further.
“After identifying the right area, I contacted several agents, but each one quoted a different price for the same apartment, which left me confused. On top of that, the price kept increasing every week. So, after about a month of being lost in the ‘maze’ of house prices, my husband and I decided to borrow more to make the purchase,” Ms. Hiền shared.
Many others, like Ms. Hiền, are rushing to buy despite high prices. For instance, Mr. Hưng’s family, after renting for nearly three years, decided in late July to take out a VND 1.5 billion bank loan to buy an apartment. Together with nearly VND 2 billion in savings, they purchased a VND 3.5 billion apartment in Nam Từ Liêm district, Hanoi.
Mr. Hưng explained that although they had planned to buy a home for a long time, various reasons caused delays. By early 2024, as home prices continued to “dance” and with forecasts predicting further increases when the Housing, Land, and Real Estate Business Laws take effect, his family decided to expedite their purchase.
The “fear of missing out” is understandable in the current context, as many recent forecasts suggest that real estate prices will rise, potentially significantly, due to the impact of new laws. This has prompted previously hesitant buyers to act quickly.
Many forecasts predict that apartment prices will continue to rise
According to the Market Research and Customer Insights Center at OneHousing, the first half of 2024 saw over 52,000 real estate transactions in Hanoi, with apartments (both primary and resale) accounting for 54% of the total.
The supply of new properties, the number of transactions, and the unit prices all increased. In particular, Hanoi’s primary supply in Q2 2024 grew for the fifth consecutive quarter, reaching nearly 8,400 units—up 97% from the previous quarter and 340% year-over-year. Favorable macroeconomic factors and a series of new projects coming to market drove Q2’s supply to the highest level since 2020.
The majority of Q2’s new apartment supply came from the high-end and luxury segments, which made up 97% of the market. The affordable segment has vanished, while the mid-range only accounted for about 3%. Future supply is expected to mainly come from the eastern and western areas of Hanoi, where large-scale new projects are being launched.
Apartment transactions increased in both volume and price. Compared to Q1 2024, Q2 2024 saw a 49% increase in transaction volume and a 21% rise in average prices.
Mr. Trần Minh Tiến, Director of the Market Research and Customer Insights Center at OneHousing, believes that the implementation of three real estate-related laws provides a foundation for the continued growth of Hanoi’s apartment market in the second half of 2024 and the coming years. The signals from Q2 indicate a strong recovery in the apartment market after five consecutive quarters of growth, marking the start of a new growth phase.
Commenting on the recent price trends, Mr. Lê Đình Chung, CEO of SGOHomes, noted that apartment prices in Hanoi are experiencing a significant surge, with the average price reaching about VND 60 million per square meter. He views this as a market trend rather than a speculative bubble, predicting that the price rise will continue this year and into next year.
According to CBRE Vietnam experts, apartment prices are expected to grow by over 20% annually from now until 2026—a rate unprecedented in the market.
From the perspective of a developer, Mr. Nguyễn Dũng Minh, Deputy General Director of MIKGroup, pointed out that over the past five years, large-scale projects like Vinhomes Smart City, Vinhomes Ocean Park, and Ecopark have created substantial added value. For example, four years ago, apartment prices at Vinhomes Smart City ranged around VND 40 million per square meter, but they have now risen to VND 80-90 million per square meter.
“Short-term issues like limited supply are among the factors driving up prices. From now until the end of the year and into early next year, average apartment prices in Hanoi will continue to rise,” said Mr. Minh.
Additionally, Mr. Minh emphasized that the increase in apartment prices does not indicate an overheated market but rather reflects the real value provided by well-invested, large-scale projects with good infrastructure.