Cheap apartments are getting more expensive
Knowing that the old apartment was priced at 50% of the price when he bought it, Mr. Hung could not be happy because if he wanted to move, he would have to accept that other apartments were also expensive.
Mr. Hung, Thanh Tri district, has just put up for sale a 45 m2 apartment in Dai Thanh Urban Area for 1.3 billion VND (about 29 million VND per m2). The male technology car driver said that some surrounding apartments were being sold at high prices, so he contacted a broker to ask for the price. He was quite surprised when the cheap apartment he bought for 850 million VND (about 19 million VND per m2) three years ago has now increased by more than 50%.
However, to move to a larger apartment, 65 square meters in another building in the same urban area, he has to pay nearly 700 million more. The broker said the price of this building is more expensive than the old building he lived in because it is not affected by the stench from the market and the garbage collection point. This is also the reason Mr. Hung wants to move house when his family is about to have a baby.
"The increase in the price of my old house makes me excited, but to move to a bigger one, I have to accept that the price will also increase," he said.
Hung’s situation is not uncommon. Chi, a resident of Hoang Mai District, started looking for a house at the end of last year. With about one billion VND in savings, her family wanted to move from the mini apartment they had rented for three years to a cheap old apartment. She chose to buy a 56-square-meter apartment for 1.8 billion VND (about 32 million VND per square meter) in Linh Dam Urban Area. This price was 20% higher than the price she had asked for 6 months ago.
"Low-cost apartments are getting more and more expensive, almost double the price compared to when they were first launched, but I still try to buy them to live more safely," said the female office worker.
Many low-cost apartment complexes, which were opened for sale at 10-15 million VND per square meter a decade ago, have been continuously increasing in price recently. The CT11 Kim Van - Kim Lu apartment project, Dai Kim Ward, Hoang Mai District, was opened for sale for the first time in 2013 with a price of less than 14 million VND per square meter, not including the difference paid to brokers. Currently, apartments are priced from 30 million VND per square meter on the transfer market.
At the end of 2012, the Xuan Mai Tower project in Ha Dong district was launched on the market with a selling price of 14-18 million VND per square meter. Two-bedroom apartments from 45 square meters cost only about 630-810 million VND. After ten years, the smallest apartment is being transferred from 32 million VND per square meter.
Recent data from Batdongsan channel also shows that the average selling price of apartments in Hanoi in the first two months of this year increased by 17% compared to the same period last year. Among the projects with the strongest price increases, there are also low-cost projects such as Dai Thanh apartment with an increase of 27% or Xa La urban area with an increase of 23%.
Explaining the above developments, Mr. Pham Duc Toan, General DirectorEZ Real Estate Investment and Development Joint Stock Company said that high housing demand in the context of scarce new supply has caused the price of old apartments to continuously increase in recent times. Low-cost apartment buildings, opened for sale ten years ago, have also "followed" this wave. Although the handover has been many years, the state of deterioration is clearly visible, but prices have still increased in the past 12 months, averaging 12-15%.
Mr. Toan said that, in the segments, the growth of affordable apartments is most evident because of the low initial price, handed over many years ago. After benefiting from the general increase, the selling price of many low-cost buildings has surprised many buyers. This is also a segment with active transactions, attracting more attention because it is suitable for the budget of many workers.
Data from research unit Savills also shows that from 2020 to 2024, the number of apartments handed over will decrease by 36% per year, while the average primary price is about 48% higher than the secondary price, causing a large shift to the transfer market, including low-cost apartments.
Sharing the same view, Mr. Nguyen Chi Thanh, Permanent Vice President of the Vietnam Real Estate Brokers Association, said that many buyers are following the crowd mentality that they have to buy a house now. They think the price will continue to increase so they make hasty decisions, even accepting to buy a house without a certificate, which is seriously degraded. This has contributed to the rapid increase in the price of affordable apartments in recent times.
However, experts believe that if apartment prices continue to increase for a long time, it will distort the housing market, limiting the opportunity for many people with low and middle incomes to own a house. Not to mention, many people are willing to buy even though there is only a sales contract showing urgent needs that have not been resolved for a long time.
Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan channel, recommends that investors and apartment buyers need to spend more time observing developments in the upcoming period when demand is about to reach the "resistance point". He said that if the level of interest in apartments in the coming months exceeds the peak of August 2023, it could lead to continued price increases.
If buying an old apartment at this time, experts advise buyers to pay special attention to the facilities, service quality and security of the project. In fact, many people fall into the situation of "living miserably in cheap apartments" due to headaches such as clogged elevators, no clean water, lack of parking or fire hazards... Not to mention with many dilapidated houses, buyers think they got a bargain but it turns out to be expensive after spending money on renovation and repair.