Behind the skyrocketing price increase of Hanoi apartments, the price "leaped" to half a billion in 3 months

Speculation in the market?

Mr. TC (Ha Dong, Hanoi) said that since mid-2023, he and many investors have returned to the Hanoi apartment market. Up to now, this segment has had a sudden growth in just 9 months.

“In November 2023, I invested in an apartment in the west of Hanoi for about 2.6 billion VND. After 1 month of completing the red book, I pushed the price up to 2.8 billion VND. The next buyer continued to close the price up to 3.1 billion VND. The increase of 500 million VND happened in just about 3 months,” said Mr. C.

In the constant chase for apartment prices in Hanoi, brokers are proactively contacting and offering to increase prices every week.

Ms. Ngoc M. (Long Bien, Hanoi) shared that at the end of 2023, she received a deposit to sell an apartment for 2.3 billion VND, but due to procedural problems, the transaction could not be carried out. At the end of February, she received a notice from the broker that the apartment had been paid 2.7 billion VND by the buyer.

“When I heard the broker announce that the apartment price had increased by 400 million VND in a few months, I was very surprised. But after exactly 1 week, the broker reported that there was a buyer willing to pay nearly 2.9 billion VND. I didn’t think that the apartment price could increase by the week like that. Therefore, I am still considering whether to sell the apartment at this time or not,” said Ms. M.

Not only apartments, some other real estate products such as alley houses in the center of Hanoi also witnessed a sharp increase in price. Referring to transactions at some large residential real estate trading floors, in the past month, houses in alleys were "closed" for sale.

Mr. Duy Dang, a real estate broker in Hanoi, assessed that the number of people interested and transacting are concentrated in small houses of 30-45 m2, priced under 5 billion VND, located in alleys in Ha Dong, Hoang Mai, Hai Ba Trung, Dong Da districts... When advertised for sale, they almost always find buyers.

Mr. Do Quy Duy, CEO of NAC Real Estate Investment Fund, said that recently, the Hanoi market has recorded a high and fast price increase rate, surpassing even Ho Chi Minh City.

“With the current rate of increase in apartment prices in Hanoi, it is possible that in less than a year, the Hanoi market will establish a price range similar to that of Ho Chi Minh City. Accordingly, mid-range apartments will cost from VND35-40 million/m2, high-end apartments will cost around VND70-80 million/m2 and higher will cost VND120-130 million/m2. This is the basic price of goods in Ho Chi Minh City in the past two years.

With such a close approach to market prices, people also have to get used to the price of 7-8 billion VND for an 80-90m2 apartment in the inner city," said Mr. Duy.

However, this CEO assessed that from June 2023 to now, the amount of speculative transactions in the apartment segment has increased very rapidly.

According to Mr. Duy, from the unit's survey, the number of people buying apartments for investment with the expectation that prices will increase further accounts for about 60%.

Real estate prices in most segments have been pushed up, but at some notary offices in Hanoi, actual transactions have not increased significantly. While brokers are quoting prices that increase every week, many sellers are still struggling to find buyers for months.

A representative of a notary office in Cau Giay district said that since the beginning of the year, the real estate market has not been as “hot” as rumored. On average, the notary office handles about 3 transfer documents per day.

Apartments "on paper" costing 60-80 million VND/m2 are mostly speculative.

In Nam Tu Liem district (Hanoi), the Lumi Hanoi project has just started construction, has not been licensed for sale yet but has been loudly inviting buyers to deposit. The deposit price for buying a house is advertised by brokerage companies and distributors at about 66 million VND/m2, plus VAT, the apartment price is up to 72 million VND/m2. Thus, a 2-bedroom apartment, about 74m2 in area, has a selling price of about 5.3 billion VND.

Dr. Le Xuan Nghia, member of the National Monetary and Financial Policy Advisory Council, assessed that apartments on paper in Hanoi with selling prices of 60-80 million VND/m2 are mostly for investment, not for living.

According to Mr. Nghia, they speculate because they see that there are no new projects on the market for low-cost housing or social housing. They also do not see projects in the affordable segment being built in a big way to create a supply of low-cost housing.

“Speculators see that localities have not paid due attention to this housing segment, so they have more motivation to speculate in the high-end apartment segment. If they buy apartments at high prices, speculators usually just wait for the price to increase to sell; and the rental business will lose money. Meanwhile, the majority of the population does not have a house,” said Mr. Nghia.

A representative of the Hanoi Land Registration Office informed that in the past 5 months, land registration changes (including buying and selling apartments and residential land) throughout the city have not changed much, and there has been no sudden growth.

(Data: Hanoi Land Registration Office)

From November 2023 to March 2024, the city-wide land change registration was highest in November last year with more than 22,000 records received and resolved. The lowest was during the Lunar New Year (February 2024) with nearly 11,000 records.

After Tet, in March, land change registration returned to stability as in previous months with more than 18,000 records.

Data from a unit under the Hanoi Land Registration Office also shows that it is quite stable, without many fluctuations. According to the leader of the Hoai Duc District Land Registration Office (Hanoi), the transfer transactions in this area through the office have not increased, mainly people come to make secured transactions.

It can be seen that the constant chase for price levels is positive news for investors, but it becomes a "nightmare" for real home buyers.

Dr. Le Xuan Nghia believes that it is necessary to restructure the real estate market, in which whether or not social housing and low-cost housing can be created for the people will determine success or failure.

“If we cannot create a social housing system and affordable housing that meets the needs of the majority of people as requested by the Prime Minister, we will not be able to restructure successfully. The market may return to the high-end housing segment, with speculators pushing up prices, and at some point the bubble will burst again,” Mr. Nghia worries.