Apartment prices in Hanoi are forecast to continue climbing by an additional 10% due to low supply, property service firm CBRE said in a report.
The report showed that the housing market in Hanoi continued to see scarce supply in the first quarter of this year. New supply mainly came from high-end apartment projects in the west of the city, with more than 2,300 apartments and 30 low-rise houses put up for sale.
The number of new apartments for sale increased 11% in Q1 from a year earlier, but was still lower than the 3,000-4,000 units recorded in Q1 of 2021 and 2022.
Apartment absorption was relatively positive in Hanoi, with more than 2,000 units sold, equivalent to that in Q1/2023.
CBRE said that the biggest bright spot in the primary housing real estate market came from projects that are currently accepting reservations. For example, a project in Tay Mo ward, Nam Tu Liem district was oversubscribed with 4,500 reservations. This project, along with many others recently opened for sale in Hanoi, is attracting interest from local customers and people based in Ho Chi Minh City.
Notably, the average selling prices of projects in Hanoi in both the primary and secondary markets have increased rapidly and are gradually approaching HCMC levels. Most of the new supply was in the high-end segment, pushing up primary selling prices. The average primary selling price has reached VND56 million ($2,240) per square meter (excluding VAT and maintenance costs), an increase of 5% quarter-on-quarter and 19% year-on-year.
In the secondary market, apartment prices recorded the highest ever hike of 17% in Q1 over the same period last year, reaching VND36 million ($1,440) per sqm. Strong growth was seen in most districts in Hanoi, especially in the west where supply is abundant and the population is dense.
Nguyen Hoai An, senior director of research and consulting at CBRE Vietnam, said that interest in apartments in Hanoi is increasing. Meanwhile, the villa and row house segments remain quiet.
For landed real estate, nearly 300 units were sold in Q1, down 73% year-on-year. However, many projects recorded positive absorption rates. For example, a project in Nam Tu Liem district offered nearly 700 new units for sale, about 80% of which were sold. A low-rise housing project in Ha Dong district that opened for sale at the end of 2023 has also sold nearly 90% of its portfolio.
Primary selling prices in this segment have continued to rise and reached more than VND190 million ($7,600) per sqm in Q1, up 4% from Q4/2023, mainly because new supply remained limited. Secondary selling prices also began to rise again, hitting an average of nearly VND160 million ($6,400) per sqm, up 1% quarter-on-quarter.
This year, the Hanoi market is expecting more than 12,000 new apartments launched for sale, an increase of nearly 20%. New supply continues to concentrate in the high-end segment, causing primary prices in 2024 to remain high and possibly increase by 10% year-on-year. Meanwhile, the secondary selling prices of apartments, after fluctuating over the past two years, are expected to gradually level out thanks to abundant new supply in the coming quarters.
New supply of landed properties is estimated at more than 5,500 units, mainly in large urban areas, contributing to livening up the market.
According to Duong Thuy Dung, executive director at CBRE Vietnam, signs of a recovery in Vietnam's economy and the government's moves to accelerate the enforcement of the revised 2024 Land Law have contributed to enhancing investor sentiment.
"This year is considered a pivotal year for the market to transition to a new, healthier, and more sustainable stage of development. Market players will benefit from home purchase and rental policies with many attractive incentives," she said.