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Jan 30, 2023 / 16:32

Sharp rise in apartment prices in Hanoi: VARS

Much of the supply of apartments come from suburban areas, but sales remain slow because prices are comparatively high relative to incomes.

Prices for apartments in Hanoi tend to increase as supply becomes short, according to the Vietnam Association of Realtors (VARS).

A social housing project in Hanoi's Bac Tu Liem District. Photo: Pham Hung/The Hanoi Times

In a recent report on the Vietnamese property market, VARS said that the primary selling price for apartments in Hanoi was VND50 million (US$2,132) per square meter in 2022, up 10-15% on-year.

According to the report, 31 projects have been listed with more than 2,000 units for sale in Q4/2022, most of which were high-end.

Of the total, only two projects were brand new, while 29 others were already in operation.

The actual transaction volume in Q4 2022 was 435 deals, equivalent to 20% of all offers. In several landed property projects in Thanh Xuan and Tay Ho districts, prices rose to VND400 million per square meter, but only a few transactions were closed.

VARS chairman Nguyen Van Dinh said supply has decreased in recent months, especially affordable properties, as urban districts run out of land.

"Seventy percent of the total supply comes from megacity projects in the east and west of the capital, where land is still abundant," he said.

He said that demand is quite high, but transactions have stalled because properties are comparatively expensive for most buyers' incomes.

Other causes are rising interest rates and banks' increased control over lending, Dinh said.

The market will see little change in a few months, Dinh added.

"Although supplies will remain tight, prices will hardly go up. But they will also not go down easily due to high input costs," the VARS official said.

According to VARS forecasts, in the first and second quarters of 2023, the overall market will see a decline in average price. "If the economy shows improvement, prices could go up."

In the meantime, prices for affordable apartments will not fall and will even increase if supply remains insufficient, according to VARS.

Market supplies will vary little in the first few months of 2023. If macroeconomic policies are adjusted, affordable and social housing projects could be boosted by the end of the first quarter, increasing market supply.

Property market data firm Savills forecasts that the market will receive a supply of some 15,800 apartments from 21 projects in 2023.

According to Savills, people will continue to move to suburban areas in the future, adding that nearly 104,000 apartments will be offered for sale between 2023 and 2025.