The apartment market in Hanoi shows no signs of slowing down as prices continue to soar, with industry experts projecting further escalation until hitting the affordability threshold for prospective buyers.
According to Duong Thuy Dung, senior director at CBRE Vietnam, the capital city witnessed a remarkable surge in apartment prices last year, ranging from 10 to 45 per cent compared to the previous year.
Dung anticipates that this trend will persist in 2024, with prices expected to climb between 16 to 24 per cent higher than the preceding year.
Dung highlights that the current price surge marks the most pronounced escalation in the past five years, attributing it to a confluence of factors. Chief among these is the acute scarcity of apartment supply amidst sustained high demand, coupled with prolonged pent-up demand in the market.
Data from CBRE reveals that only around 11,000 new apartments were introduced to the Hanoi market last year, a stark contrast to the 35,000 to 40,000 units typically launched annually between 2015 and 2019.
This scarcity has persisted, with last year marking the fifth consecutive year of declining new supply in the Hanoi apartment market, reaching its lowest point in a decade.
Simultaneously, demand for housing remains robust, driven by rapid population growth and urbanization in Hanoi. The significant disparity between supply and demand dynamics has created an environment ripe for price escalation.
Furthermore, low-interest rates have spurred investors to withdraw savings and redirect funds into real estate investments, particularly the apartment segment. This departure from traditional investment avenues has bolstered the attractiveness of apartment investments, previously deemed less lucrative due to modest rental yields.
However, Dung underscores that the price surge is not uniform across all projects, noting that developments boasting comprehensive infrastructure, completed amenities, and strong rental potential witness the most substantial price appreciation.
Looking ahead, the trajectory of apartment prices in Hanoi remains contingent on various factors, including project location and quality. Dung suggests that the market may eventually reach a point of equilibrium, where affordability constraints and buyers' purchasing power cap further price escalation.
In light of these developments, investors and industry observers alike ponder the sustainability of the current price surge, with keen attention on when the market may plateau.
As witnessed in Ho Chi Minh City, where apartment prices stabilized after a five-year surge, similar trends are anticipated in Hanoi, albeit with their unique timeline.
For now, the upward trajectory of apartment prices in Hanoi persists, fueled by a combination of supply-demand imbalances, investor sentiment, and macro-economic factors.
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