Prices of old apartments in Hanoi soar due to shortage of supply
High prices of old apartment buildings in Hanoi, constructed four to five years ago, have surged exponentially, sometimes rising to double or even quadruple their initial selling prices. Real estate specialists claim that these soaring prices are not indicative of the actual market value due to minimal transactions. They believe that the primary reasons for these high costs are speculation and market manipulation driven by supply shortages.
Many examples exist that show the dramatic spike in prices of old apartments. For instance, the GPT apartment complex on Pham Van Bach Street in Cau Giay District, operating since 2021, is now being marketed at over VND90 million (US$3,516) per square meter. Similarly, the CTP apartment complex on Trung Kinh Street in Cau Giay District, in operation for nearly a decade, is listing prices as high as VND88.5 million ($3,457) per square meter. In Nam Tu Liem District, an apartment building along Thang Long Boulevard has units listed at VND84 million ($3,281) per square meter, despite being delivered to customers several years ago. The ECF apartment complex on To Huu Street in Ha Dong District is offered at VND76.6 million ($2,994) per square meter. Another striking example is the MDP Project in Nam Tu Liem District, now being advertised at an astonishing VND200 million ($7,818) per square meter.
Though these standalone apartment projects lack extensive amenities, like green spaces and playgrounds, their selling prices exceed those offered by their developers. An apartment complex on Trung Kinh Street in Cau Giay District also experienced a price doubling over a decade despite space limitations.
Professor Dang Hung Vo, an expert in land management, explained that real estate prices typically rise in densely populated regions. He emphasized that recent hyperinflation indicates artificially inflated prices due to businesses potentially spreading rumors to boost property values. Vo’s suggested remedy for speculation was a reasonable property tax system targeting vacancies and quick resales while levying higher taxes on multiple property owners.
Nguyen The Diep, vice-chairman of the Hanoi Real Estate Club, pointed to the severe disparity between the demand for new commercial apartments and their supply as a principal cause of scarcity, leading to speculation, price hikes, and market manipulation. To counter these issues, Diep advised thorough research to avoid overpaying. Six defendants faced legal action recently for inflating land prices in Soc Son District, with prison sentences ranging from twelve months to three years. The market’s current state underscores the need for a stable, healthy real estate environment that aligns with economic realities.
