Image Source: Hanoi average property prices almost double since 2018
Hanoi's real estate market is witnessing a positive shift as the supply of residential properties experiences a notable uptick in the third quarter of 2023. With over 1,800 units introduced during this period, this reflects an 8% increase compared to the previous quarter, albeit a 36% decline on-year.
Factors Driving the Market
This development can be attributed to the recent reduction in interest rates by the State Bank of Vietnam, which has created better conditions for both investors and homebuyers to re-engage with the market. However, it is important to note that the total new supply during the first nine months of 2023 has decreased significantly compared to the growth observed from 2020 to 2022.
Segment Dominance and Sales Performance
According to a report by Cushman & Wakefield, the mid-range segment continues to dominate the supply influx, accounting for nearly 85% of the total. Most of these new offerings come from subsequent phases of ongoing primary projects in Hanoi's western region.
In terms of sales, there has been an increase in the volume of residential units sold during the third quarter. Approximately 2,300 units were successfully transacted, representing a 10% increase compared to the previous quarter. Nonetheless, this signifies a 49% drop on an annual basis, which can be attributed to the reduced lending rates.
Prominent sales were observed in projects located in Hanoi's western and suburban areas. Additionally, developments with well-managed construction progress, clear legal standings, and a wide array of amenities noted higher sales performance.
Hanoi's real estate market is showing signs of recovery
Surge in Property Prices
The report also highlights a significant surge in the average price of primary properties during the third quarter of 2023. Prices reached an average of $2,141 per square meter, marking a 5% quarterly increase and nearly 12% on an annual basis. This surge is primarily driven by ongoing sales of mid-range projects with higher pricing points than the average primary residential offerings. Notably, the projects that experienced the most significant price hikes are primarily located in Hanoi's western districts, such as Cau Giay and Nam Tu Liem.
Market Recovery and Future Outlook
While demand from end-users has shown improvement, the market is still in the process of recovery. The tightening of government credit policies and signs of economic instability in the latter half of 2022 have had an adverse effect on the real estate market. However, recent governmental efforts to support the economy at large and the real estate sector through interest rate cuts, corporate bond restructuring, and legal framework revisions have started to alleviate some of the challenges faced by the market.
In summary, although there has been noticeable improvement, full recovery has yet to be achieved. Residential sales in the first nine months of 2023 have decreased by 44% compared to the same period in 2022. The market requires additional time to overcome challenges such as credit shortages, bond defaults, and low liquidity.
Looking ahead, experts anticipate that the majority of future housing supply will shift to suburban areas, aligning with the growing trend of suburbanization. In 2023, a total of 8,000 residential units are projected to be introduced, the lowest figure since 2018. Due to land constraints in inner districts, the residential supply is expanding towards more remote areas, especially in the east. These areas have become destinations for large integrated urban areas, offering comprehensive facilities and convenient locations through key transportation projects like Ring Road No.4 and Ring Road No.3.
Source: VIR
Disclaimer: The information provided in this article is sourced from VIR and is subject to change based on market dynamics and other external factors.
