Anticipating a Booming Real Estate Market but Concerned About Rising House Prices
Hoang Mai, Hanoi – Anh Minh invested in three plots of land in different provinces in Vietnam at the beginning of 2022 when the real estate market was heating up. Unfortunately, the market soon froze, leaving him stranded. With leveraged investments, he couldn’t keep his capital tied up in land forever. Anh Minh had to sell one of his plots in Bac Ninh at a loss of 30%, priced at 1.2 billion VND, after buying it for 1.7 billion VND earlier. However, finding buyers was difficult even with the price reduction.
For months, Anh Minh waited for a new buyer for his plot of land, unwilling to sell and hoping for the market to regain its momentum. In early March 2024, he finally received an offer matching his initial investment. However, he decided not to sell, holding out for the start of a new market cycle and waiting for a truly vibrant market.
Although Anh Minh is eager for the market to recover so he can sell his property, he also worries about the high housing prices in Hanoi amidst the current market boom. “My house is located deep inside an alley, and I want to move to a location with direct road access for parking. Currently, the price of real estate in Hanoi is skyrocketing, and I’m concerned that when the market truly booms, prices will rise even higher. At that time, even if I sell my investment properties, I won’t have enough money to switch to a better location,” shares Anh Minh.
In fact, the real estate market, especially the condominium segment, has experienced significant price increases in Hanoi recently. Many buyers, sellers, and real estate agents have noticed the upward trend of condominium prices, with some projects seeing price increases of over 20% in just one year.
The list of condominium projects witnessing sharp price increases in Hanoi includes Royal City, The Pride, My Dinh Song Da Sudico Urban Area, Sun Grand City with a 33% increase, Mipec Rubik 360 and Vinhomes West Point with a 28% increase, Dai Thanh condominium with a 27% increase, and Seasons Avenue with a 26% increase.
In response to the soaring prices of condominiums, many people have shifted their focus to purchasing residential land. This can be seen in the 27% increase in search volume for houses compared to the same period last year, according to data from Batdongsan.com.vn.
The New Real Estate Cycle Begins in Q2 2024
Providing insights into the market, Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Realtors (VARS), believes that the real estate market in the first few months of 2024 is gradually recovering, with differentiation among segments and regions due to varying absorption capabilities. One major bottleneck in the market has been the monetary policy, which has gradually been lifted since 2023 and will become more flexible and accommodating in 2024, creating easier access for businesses and individuals.
“Real estate has already started to recover, albeit only by about 20-30% compared to its peak. However, moving forward, the market will follow a better scenario. The big breakthrough is expected to occur in the first quarter of 2024 due to the significant decrease in interest rates and the favorable policy environment,” analyzed Mr. Dinh.
Mrs. Pham Thi Mien, Deputy Head of the Market Research and Investment Promotion Advisory Board at the Vietnam Association of Realtors, stated that although it is not yet certain that the market will experience high growth in 2024, this year will lay the foundation for the new development cycle of the real estate market.
Mr. Le Bao Long, Director of Strategy at Batdongsan.com.vn, predicted that with upcoming changes in regulations, the market is expected to see widespread growth in prices across various types of real estate, as well as an increase in the quantity and quality of new projects. The standards and development capacity of developers will also be raised due to stricter conditions for investors. Furthermore, the rights of real estate consumers will be better protected.
Overall, industry experts believe that the new real estate cycle will begin in the second quarter of 2024, and segments with prices approaching the affordability of the majority of buyers are expected to recover more quickly.
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