The scarce supply of new projects remains a key factor keeping demand for housing high in Hanoi’s real estate market in 2023.

Locals looking at a real estate project in Hanoi. Photo: Pham Hung/The Hanoi Times

During the last months of 2022, transactions in the real estate market stayed in stark contrast to the previous boom period.

Experts suggested that this was due to several laws regulating the market not being completed, coupled with a sharp decline in liquidity as a result of the government's direction to restrict credit flows in high-risk fields and tighter regulations on corporate bond issuance.

The sharp drop in transaction volume and supply, coupled with the high demand for housing, means that prices continue to rise.

Data from the Vietnam Association of Realtors (VARS) showed in the fourth quarter of 2022, Hanoi has 31 new real estate projects with a total of 2,030 units. Among them, Eurowindow River Park is the only apartment building with a price of below VND30 million (US$1,279) per square meter, with nearly 40% of the units sold after being listed for two weeks.

Meanwhile, the average housing prices stay at around VND50 million ($2,132) per square meter. Given the increasingly limited land in the city’s center, 70% of new supplies come from projects in the East and the West, including Highway 5 Residences, Hanoi Melody Residences, Imperial Smart City, Park 1, 2 – Eurowindow River Park, and the Zei.

In addition, detached house projects in districts of Thanh Xuan and Tay Ho with prices of up to VND400 million ($24,000) per square meter have failed to attract customers, with the exception being the Highway 5 Residences (Gia Lam District) thanks to competitive prices and the complete infrastructure in the surrounding areas.

"Despite the high real demand for housing, the volume of transactions remains low due to high prices compared to the average income of the population. Investors in real estate projects have also had difficulties finding new opportunities due to the increase in interest rates and lending tightening," Nguyen Chi Thanh, vice chairman of VARS, told The Hanoi Times.

Thanh expected no major changes in the real estate market in the coming months, as supply remains low, even for the luxury segment.

Rising prices

The VARS report noted that new apartment offers in Hanoi were at the lowest level in the last eight months due to rising prices, averaging almost VND47 million  ($2,000) per square meter or an 11% annual increase since 2018.

“The majority of new projects are in the city’s Eastern area thanks to the available land funds and improving infrastructure,” Thanh from VARS said.

He added that, in the short term, the low and middle segments would be in high demand, which would translate into house price increases in the first half of 2023.

Coinciding with the opinion of Thanh, the vice president of the Vietnam Real Estate Association (VNREA), Nguyen Manh Ha, said that prices of apartment construction projects continued to rise in 2022, with those of Ha Dong districts, Nam Tu Liem and Hoang Mai climbing to VND40 million ($1,705) per square meter.

“It is unlikely that housing prices would decline in 2023 and therefore, the market is expected to stay unchanged,” Ha told The Hanoi Times.

According to Ha, the complicated legal procedures for the approval of new projects and lack of credit access are among the key issues.

General Director of Cushman & Wakefield Trang Bui said locals tend to move to satellite towns, especially in the East bordering major industrial hubs such as Hung Yen or Bac Ninh.

“A key factor attracting customers would be the adequate infrastructure facilities in the surrounding areas, especially the availability of large parking areas,” she added.