A Surprising Trend in Hanoi's Real Estate Market

Despite a significant increase in supply, Hanoi's apartment prices have continued to rise, marking a 26.2% increase from full-year 2023. This trend is in stark contrast to previous years, where supply shortages were blamed for driving up prices.

Property consultancy CBRE noted that the surge in supply has effectively ended the housing shortage in Hanoi. However, new apartment prices have risen by 26% year-on-year to VND64 million (US$2,530) per square meter on average in the third quarter.

Analysts attribute this paradox to several factors, including the concentration of new units in a few projects, lack of market competition, rising construction costs, and speculation. Pham Duc Toan, CEO of real estate agency EZ Property, highlighted that the current supply is mainly concentrated in high-priced areas, making it difficult for prices to decrease.

The demand for apartments is not only driven by housing needs but also by investors seeking to park their money in real estate, as other asset classes have not performed well this year. Additionally, speculators have been using various strategies to inflate prices, further contributing to the rise in apartment prices.

Despite these challenges, some degree of price growth is justified due to increased construction and material costs. The government is considering policies that could resolve legal issues hampering existing projects and allow more types of land to be used for commercial housing development, potentially making housing more affordable.