Prices of apartments in Hanoi have now surged by 10-15% against the same period of last year and reached a record high level.

Investors looking for information on a new real estate project in Hanoi. Photo: Cong Hung

High demand for apartments in the capital means there are no more projects with prices of VND35 million (US$1,500) per square meter in the downtown area, while the average price of budget apartments in the districts of Ha Dong, Nam Tu Liem, or Hoang Mai has also surpassed the VND30-million mark per square meter.

Data from CBRE revealed the average selling price of apartments in Hanoi rose by 9% year-on-year during the second quarter to $1,293 per square meter.

Prices of high-class projects in downtown areas such as Hai Ba Trung, Dong Da, and Ba Dinh posted an average rise of 10%.

Director at the Project Marketing Department of CBRE Vietnam Kiet Vo said demand for apartment leasing rose by 6% during the period, while search frequency for apartment purchases increased by 6% and 4% for high- and mid-level apartments respectively.

The supply for budget apartments in Hanoi stood at the lowest level in the past five years, Vo added.

“During the first six months of 2022, high-class apartment projects make up 55% of the market’s new supplies, while rising prices of construction materials have also sent the prices soaring,” he told The Hanoi Times.

The surge in price of this market segment is due to investors’ sentiment that land prices would be on the way up due to fear of the devaluation of the Vietnamese Dong (VND) amid rising inflationary pressure, according to experts.

“Rising apartment prices are seen not only in Hanoi but also in other provinces/cities, as the trend may continue for the foreseeable future, due to high construction material costs, scarce supplies of new projects and concern for inflation,” economist Dinh The Hien told The Hanoi Times.

Hien, however, warned investors to stay cautious before making any purchase decision, adding the upward trend in apartment prices should not be seen as a factor of market recovery in the post-pandemic period.

“Price increase is due to investors’ concern over inflation and ongoing complicated procedures for new projects, which would require state intervention to curb the trend,” Hien added.

Sharing Hien’s view, Vice Director of real estate service company DKRA Vietnam Vo Hong Thang called for the Government to continue stabilizing macro-economic conditions and keep stable policy rates to avoid rising inflation.

"In the long term, the government needs to fully address legal issues to simplify licensing procedures for new projects, eventually balancing market supply and demand." Thang told The Hanoi Times.

Thang also stressed the necessity for more transparency in the planning process and market information to keep prices at a stable level.