New apartment prices in Hanoi surpass Ho Chi Minh City in the third quarter

In its Q3 market report, real estate consultancy Savills said that apartment prices in Hanoi continued to climb in both new and old projects. Accordingly, the price level of new projects increased by 6% quarter-on-quarter and 28% year-on-year, reaching VND69 million per square meter. The high increase in primary projects also caused the selling price of old apartments to climb, by 41% year-on-year, to VND51 million per square meter.

The number of apartments sold in Hanoi this quarter reached more than 6,800 units, up 35% quarter-on-quarter and 226% year-on-year. Mid-range to high-end apartments took the lead, contributing 98% of transactions. In the first 9 months, 70% of the units sold were priced above VND4 billion, a sharp increase from 2% in 2020. The segment from VND2 to VND4 billion accounted for 29%.

"Only 1% of apartments that have been traded are priced under VND2 billion, showing a serious imbalance in the product structure of the apartment segment," said Ms. Do Thu Hang, Senior Director of Research and Consulting at Savills Hanoi.

In contrast to the Hanoi market, new apartment prices in Ho Chi Minh City are on a downward trend. The average primary apartment is 68 million VND per square meter, down about 12% compared to the previous quarter. The reason is that many investors have adjusted their segments, reducing the proportion of mid-range and high-end products in the primary supply.

Transaction volume in the quarter also decreased by about 16% QoQ and 4% YoY, reaching about 1,900 units. Absorption rate also decreased, reaching 39%. New supply reached an absorption rate of 62%, while inventory was at 35%.

In fact, the gap between apartment prices in Hanoi and Ho Chi Minh City used to be quite large because the economic locomotive market developed early, often 2-3 years ahead. Since the end of last year, the apartment price race between the two big cities has become increasingly close.

Data from the Batdongsan classifieds channel shows that by May, the average selling price of new and old apartments in Hanoi projects reached 50 million VND per square meter, equal to that in Ho Chi Minh City. Meanwhile, in early 2018, apartments in the capital were about 4 million VND per square meter lower.

Explaining the above developments, Ms. Do Thu Hang said that the apartment market in Ho Chi Minh City developed strongly in 2018-2019. At that time, the large supply was mainly in the high-end segment, pushing the price level to a high threshold. Meanwhile, from mid-2023 to now, the apartment market in Hanoi has entered a period of sudden increase.

Ms. Hang acknowledged that the supply of apartments in the first 9 months of the year had improved significantly, but only in quantity. Most investors focused on the high-end segment, causing prices to increase rapidly.

A recent survey of more than 3,000 readers showed that about 52% of respondents said they could afford to buy an apartment in the under VND2 billion segment. With affordable apartments becoming increasingly rare, Savills assessed that "home ownership has become more difficult than ever for many people". Along with that, legal problems and difficulties of developers have made this situation even worse.

In the coming time, the supply of apartments in Hanoi tends to improve, but mainly in the mid-range and higher segments, while affordable apartments continue to disappear. Savills said that by the end of the year, there are expected to be 9,700 apartments for sale, of which 88% will come from the next phases of large projects. From 2025 onwards, about 10,000 apartments from 106 projects will be launched on the market, but in the mid- to high-end segment.

In the context of high apartment prices, experts recommend that buyers should save at least 30% of the house value before considering installment payments, have a clear financial plan, and carefully research the project's progress and legal status.