Low supply drives apartment prices up in Hanoi, HCMC

Since last month Nguyen Bich Ngoc in Hanoi has been looking to buy a two-bedroom apartment for around VND3 billion (US$119,000), and makes visits almost every weekend.

“There were some apartments I liked but they were either snapped up quickly or their prices were raised within a week,” she says.

Many people in Hanoi and HCMC seem to be fearful they will miss out as apartment prices keep rising.

Hanoi apartment prices rose 25% year-on-year in the second quarter, according to property consultancy CBRE Vietnam.

In the first six months sales topped 12,200 units, higher than in the whole of 2023, with more than 80% happening in the second quarter, it added.

Property brokers say apartment prices have risen by 5-10% since the beginning of the second quarter.

In HCMC, the developer of a project in Thu Duc City has raised prices by 36% to VND250 million per square meter in recent months. Prices are up 4% at Fiato Uptown in the same city and 10% at two projects in Nha Be and Binh Chanh Districts.

Data from CBRE shows that 70% of new supply is priced at two or three times the market average. But prices are also rising quickly in the secondary market.

City Garden in Binh Thanh District is up 18% year-on-year to VND85 million per square meter; other projects in District 7 and 2 have seen increases of around 10%.

Analysts pointed to the lack of primary market supply for the rising prices.

Su Ngoc Khuong, senior director of property consultancy at Savills Vietnam, said supply is low in both the affordable and high-end apartment segments. “Many developers are still trying to resolve the legal issues faced by their projects. The limited land availability also increases prices.”

CBRE data shows that while supply this year has been only 40% of last year’s, the number of transactions has reached 80%.

An estimated 3,800 new apartments are set to be launched in the remaining months of the year, but prices are unlikely to go down, it said.

In Hanoi around 9,000 new apartments are set to enter the market, the highest in the last four years, it said.

Property services company OneHousing expected high-end apartments (VND50-80 million per square meter) to account for 70% of the supply in upcoming months.