Hanoi has witnessed a strong increase of 20-25% in apartment prices in the primary market and the upward trend is forecast to continue in the next few years.

Some 70% of apartments offered for sales in the first half of the year were in the high-end segment with an average price of VND60-120 million ($2,370 - 4,740) per sq m, according to Ms. Nguyen Hoai An, senior director at CBRE Vietnam.

The first six months of 2024 saw a significant rise in apartment supply, doubling the figure of the whole 2023, according to CBRE Vietnam.

However, the majority of the supply focused on the mid- and high-end segments with high prices.

In 2024-2025, some 22,000-23,000 apartments will be supplied to the Hanoi market annually, according to a study by research firm OneHousing.

The CBRE Vietnam estimated that Hanoi will supply some 55,000 apartments by 2026.

Mr. Tran Quang Trung, Business Development Director of OneHousing, said one of reasons leading to the price increase in Hanoi is a change in behavior and demand of customers. From 2021, many investors from Taiwan (China) and Hong Kong (China) have bought apartments in Hanoi after apartment prices in Ho Chi Minh City started to come to a standstill.

Besides, by the end of 2023, the amount of deposits at credit institutions was estimated to be around VND13 quadrillion ($514 billion).  A significant proportion of these deposits will likely flow into markets such as gold, stocks, and real estate when they reach maturity, according to Mr. Trung.

“Our survey shows that many customers plan to buy apartments in Hanoi worth VND3-7 billion ($119,000 – 277,000) in the next 3-5 years,” he said.

Meanwhile, Mr. Nguyen Van Dinh, Vice Chairman of the Vietnam Real Estate Association,  said the rise in housing prices in Hanoi and Ho Chi Minh City shows signs of vested interests.

The rise in market prices in recent months is suspicious, he said. “The increase is definitely caused by a group of people who want to conduct real estate business unethically amid the slow recovery of the market and people's low income,” he said.

He pointed out that the stagnant supply of apartments is the main cause of the property price rise, as no new projects have been approved in recent years and only second-hand apartments are being transacted.