Hanoi, HCMC in apartment price race

The average primary asking price of apartments in Hanoi has increased for 20 consecutive quarters to VND58 million ($2,363) per square meters, while in Ho Chi Minh City, apartments priced under VND2 billion ($81,000) per unit are no longer available.

January 2024 real estate market data from leading property listing website batdongsan.com.vn shows that apartment prices in both major cities are continuing to surge.

In Hanoi, the price of apartments in the affordable and mid-end segments recorded an increase of 2% compared to December 2023. The price of mid-end and high-end apartments in HCMC increased by 1% and 4%, respectively.

Despite the quiet real estate market, apartment prices are expected to further increase due to a severe lack of supply.

According to Savills's latest Vietnam report, in the fourth quarter of 2023, the primary apartment stock of 11,911 apartments in Hanoi dropped 40% quarter-on-quarter and 41% year-on-year.

Primary asking prices of VND58 million ($2,363) per sqm net sellable areas (NSA) in Q4/2023 increased 7% quarter-on-quarter and 12% year-on-year. Average primary prices have increased for 20 consecutive quarters due to rising land and construction costs, said Savills.

New supply in the quarter increased 52% quarter-on-quarter but decreased 1% year-on-year with 2,876 units. The next phases of the Skyline West Lake, Epic Tower, CT4 Yen Nghia and The Wisteria projects provided 2,273 units, accounting for 79% of the supply and the remaining 21% came from four new projects.

In 2023, new apartment supply in Hanoi recorded its lowest level in 10 years with 10,403 units. Grade B apartments accounted for 84% of total supply. As many as 3,045 units were sold, an increase of 45% quarter-on-quarter and 5% year-on-year. The new supply saw an absorption rate of 46%.

Savills Vietnam said that apartments in Hanoi priced from VND51-70 million ($2,066-2,835) per sqm made up 63% and 49% of new supply and sales, up 24% and 21% year-on-year, respectively.

Apartments priced over VND4 billion ($162,000) accounted for 42% of the number of units sold in 2023, up from 3% in 2019. Apartments priced from VND2-4 billion held 55% of the market share.

Notably, only 3% of apartments in Hanoi had a selling price of less than VND2 billion.

In 2024, the Hanoi market is expected to have 15 new projects and the next phases of two existing projects, providing 12,100 units. Grade B apartments will account for 79% of the market share. Hoang Mai, Nam Tu Liem and Ha Dong districts will provide 87% of the supply.

Savills Vietnam believed that products in neighboring provinces will increasingly help meet Hanoi's housing needs. Hung Yen and Bac Ninh will provide about 203,000 apartments in 2024-2026.

In addition, future large projects such as Vinhomes Co Loa (385 hectares), BRG Smart City (272 hectares), and Vinhomes Wonder Park (133 hectares) will contribute 35% of the supply.

There is a disconnection between demand and supply in Hanoi, especially for affordable properties, explained Do Thu Hang, senior director of advisory services at Savills Hanoi, adding metro lines and ring roads will accelerate decentralization when completed.

Meanwhile, Savills Vietnam reported that primary stock in HCMC has trended downwards since 2017. In Q4/2023, primary stock of 7,600 units was stable quarter-on-quarter but dropped 5% year-on-year. New supply accounted for 37% of the total primary supply.

Primary apartment prices in Ho Chi Minh City in Q4/2023 returned to the 2020 level at VND69 million ($2,810) per sqm NSA, down 36% quarter-on-quarter and 45% year-on-year.

HCMC’s primary supply reached 10,700 units in 2023, the lowest level in the past 10 years. A new project, The Privia, and the next phase of Vincom Grand Park - The Glory Heights, made up 88% of the new supply. There were no new Grade A apartments.

In particular, the number of apartment transactions decreased by 7% per year over the past 10 years. In the context of scarce supply and expensive house prices, the market recorded only 6,200 transactions in 2023.

Sales peaked in Q4/2023 with 3,000 units, up 52% quarter-on-quarter and 120% year-on-year. The absorption rate improved 14 percentage points quarter-on-quarter and 23 percentage points year-on-year to 40%. New supply accounted for 78% of total transactions, with an absorption rate of 84%.

In 2024, new supply is expected to increase four times compared to 2023. Grade B apartments will account for 44% of the supply from projects such as Vinhome Grand Park - The Opus One, Eaton Park and The Aurora. Grade A condominiums will hold 37%, coming from high-rise housing projects at The Global City, while Grade C units will make up only 19%. By 2026, 40,800 units from 116 projects are expected to be up for sale.

Savills Vietnam experts said that short-term challenges to the HCMC market still come from scarce new supply and high selling prices. In 2023, products under VND2 billion ($81,000) completely disappeared from the market. Apartments priced from VND2-5 billion led the market with nearly 90%.

In the 2024-2026 period, the supply of apartments priced from VND2-5 billion ($202,500) will decrease significantly, while products in the range of VND5-10 billion will emerge to dominate the market. Home buyers in HCMC will find more affordable housing options in neighboring provinces. This year, Binh Duong, Dong Nai and Long An provinces are expected to account for 96% of the supply of apartments priced under VND5 billion.