Hanoi Apartment Market: A Shift in Sellers' Expectations

Earlier this year, Thu Hong in Hanoi purchased an apartment for VND3.5 billion (US$138,000) with the hope of selling it for a 20% profit by year's end. However, she recently sold it for VND3.6 million, barely making any profit after accounting for loan interest and fees. Hong had listed the three-bedroom unit for two months but received few inquiries. "I sold it for no profit because I was afraid of losing money due to falling prices," she said.

In June, Hung Nguyen sold a two-bedroom apartment for a 23% profit in Hanoi, closing the deal within a week of listing. However, he has been struggling to sell another apartment of the same size for nearly a month now. He bought the 55-square-meter unit for VND2.6 billion last year and hopes to sell it for VND3.4 billion now. But brokers are advising him to lower the price by 9% to increase the chances of selling.

HCMC Apartment Market: A Similar Story

In Ho Chi Minh City (HCMC), people are also having difficulty selling apartments. Tran Hoang Son, a broker, said prices have fallen by 5-7% since July. Some owners agree to cut their prices, but prospective buyers are still reluctant to put up deposits because they expect further declines, he added.

Property listing platform Batdongsan reported that asking prices have fallen by 4% from a year ago in Hanoi and 11% in HCMC. Inquiries in the two markets have fallen by 3% and 26%, respectively. In Hanoi, some apartments are being sold at VND42 million per square meter, down 9% since the beginning of September. In HCMC, apartments in an eight-year-old building in Tan Phu District are sold at VND42 million, down 5% since August.

Market Analysis and Outlook

Nguyen Quoc Anh, deputy CEO of Batdongsan, said prices have soared in the two cities in recent years and are now stabilizing. The high-end segment is seeing declines in prices, he added. A recent survey by the platform found that over 86% of property buyers are speculators out to make a quick profit, often selling within a year.

Dang Minh Thai, CEO of property developer FD Home Thu Duc, said many sellers have bloated up prices in recent months to give an impression that the apartment market is running out of supply. But the fact is that a supply shortage exists only for units in prime locations with high construction quality and clear legal status, he added.

Economist Can Van Luc said in the first nine months of this year banks' mortgages increased by only 4.6% while developers' loans outstanding increased by 16%, according to data from the State Bank of Vietnam. "People are seeing prices at unusually high levels and are therefore choosing to delay purchases until prices drop to reasonable levels," he said.

A recent survey by VnExress of nearly 11,000 readers found almost 40% not wanting to buy an apartment due to high prices. Analysts do not expect prices to rise anytime soon since supply shows signs of increasing.