In 2019, after reading an ad about a project in Linh Dam, Do Van Hai from Hung Yen province decided that he would buy an apartment there. With VND1.5 billion, he believed that a two-bedroom apartment was within reach.

Soon after the project was launched on the market days ago, Hai contacted a broker to discuss the purchase. To his surprise, the starting price was VND40 million per sq m, which means that an apartment with the area of 70 sq m and two bedrooms would be priced at VND3 billion, which was unaffordable.

Hai said the realtor provided apartments in dribs and drabs to put pressure on buyers. People are told that if they don’t make purchases immediately, the apartments will be priced higher in the next sale campaigns.

“I heard that apartment prices will escalate, but I cannot imagine that prices would increase so sharply,” Hai said, adding that apartments in Linh Dam area priced at VND30 million per sq m previously are sold at VND40 million.

The broker told Hai that VND40 million per sq m is a very reasonable price, if noting that apartments in the suburbs were sold at VND40 million per sq m last year.

Like Hai, Tran Van Doan in Thanh Xuan district in Hanoi, complained that he failed to buy an apartment as prices have increased too sharply.

He knows that the houses in inner city are very expensive, so he sought to purchase an apartment far from the central area. However, the apartments there were not as cheap as he thought. With VND1.6 billion, he can only buy a one-bedroom apartment. The apartment is 15 kilometers from the central area and he would have to travel a long distance to reach the office.

Doan said there is no housing product priced below VND40 million per sq m at this time. The other products of the same project are offered at VND80 million per sq m.

“It is very difficult for young couples like us to own accommodation. I wish I had bought an apartment last year,” he said.

Not only new housing, but used apartments have also increased in price. According to Nguyen Van Thien, a broker in Hoang Mai, apartments at projects have seen prices increasing by VND100-200 million.

In late 2021, a two-bedroom apartment in Linh Dam was priced at VND1.6 billion, but is now VND1.8 billion. Meanwhile, there are few apartments on sale.

Do Thu Hang from Savills Vietnam said the demand in Hanoi would increase, especially demand for affordable apartments priced at around VND20 million per sq m. However, demand is high, and a shortage exists.

Affordable apartments have nearly disappeared in the large cities of Hanoi and HCM City since late 2021. A report from CBRE Vietnam showed that 8,200 apartments were put up for sale in H1, an increase of 3 percent compared with 2021. 

The selling prices in the primary market have also increased, reported at $1,872 per sq m (VND43 million per sq m), not including VAT and maintenance fee. The price is 27 percent higher than that of the same period in 2021.

As for the secondary market, price increases in many areas have been reported. The average secondary price is at $1,293 per sq m, or 9 percent higher than the same period last year. Meanwhile, a more than 10 percent increase YoY have been reported for high-end projects in central districts such as Hai Ba Trung, Dong Da and Ba Dinh.

Realtors said housing prices have increased because of a supply shortage and increased material prices. In general, building materials account for 60 percent of apartment construction costs, so construction costs have risen proportionally with building materials.

Because of high prices, the percentage of successful transactions remains modest. Savills Vietnam reported that the Hanoi apartment market is witnessing weak liquidity.

CBRE predicted that supply in Hanoi would increase again in the time to come, about 20,000-22,000 apartments.

The Ministry of Construction is working on a mechanism that will allow development of low-cost commercial housing products. However, to help people own their own homes, there are still many bottlenecks that need to be removed.

Duy Anh