Hanoi’s real estate market is expected to see a significant influx of new supply in the coming years, with an average of around 23,000 apartments entering the northern market annually. The key question remains whether this surge will be enough to cool rising prices.

A wave of new supply on the horizon

In the first three months of this year, Hanoi’s property market recorded approximately 5,300 new apartments and 164 landed houses launched from more than 30 projects, mainly concentrated in areas near and beyond Ring Road 3. The figures were shared by Le Thi Huyen Trang, Managing Director of JLL Vietnam, at a briefing on the city’s first-quarter real estate market on April 8.

High-end and upper mid-range segments continued to dominate new supply, while mid-range and affordable housing remained scarce.

Primary market prices in the first quarter stayed elevated, averaging around VND94.4 million per square metre (US$3,800), up 25.3 percent year-on-year. Meanwhile, landed housing averaged over VND254 million per square metre (US$10,200), down 9.1 percent compared to the same period last year.

Market liquidity declined slightly from the peak seen in 2025. Buyers have become more selective, favouring units with moderate sizes, clear legal status and convenient locations.

Notably, some apartment projects in newly planned areas, priced above VND140 million per square metre (US$5,600), recorded slower sales, largely targeting financially strong buyers with genuine housing needs.

According to JLL Vietnam, from 2026 to 2030, the northern housing market is expected to enter a new supply cycle, with an annual average of 23,000 apartments and 13,000 landed houses.

In the early months of the year, mortgage interest rates at many commercial banks rose to around 9-11 percent per year for the initial 6 to 12 months. This has placed greater pressure on buyers reliant on loans, affecting affordability and purchase decisions, especially as floating rates apply after promotional periods.

At the same time, core inflation rose by 3.63 percent year-on-year, creating dual pressure on developers. Construction costs have increased while real purchasing power has weakened. Prices of key materials such as steel, cement and bricks rose by about 5.7 percent, forcing many developers to adjust selling prices or delay projects with lower profit margins.

“Despite clear challenges from interest rates and inflation, the market is still supported by genuine housing demand. Real estate remains a long-term store of value in Vietnam, particularly in an inflationary environment. Demand for housing and safe investment continues to be the main driver, while high price levels and current macro conditions are likely to push short-term investors out of the market,” Trang said.

Will apartment prices fall?

Speaking further, Trang noted that rising interest rates are directly affecting both market liquidity and buyer affordability, while also placing pressure on developers and investors.

“Even with high prices, the rising cost of inputs makes a price decline very unlikely. Both buyers and sellers are currently cautious, observing the market and trying to adapt,” she said.

She added that beyond interest rates, land prices, construction costs and external factors such as geopolitical fluctuations are all pushing development costs higher. In central areas, particularly within Ring Road 3, rapid increases in land prices make price reductions almost unfeasible.

However, one clear impact of rising prices and borrowing costs is the shrinking presence of short-term investors. Speculative activity is gradually being filtered out, giving way to buyers with genuine housing needs or long-term financial capacity, focusing on sustainable investment or rental income.

On the secondary market, some apartments are being listed at prices hundreds of millions of dong lower than at the end of last year, raising questions about broader price trends. Trang noted that while such adjustments may have some impact on the primary market, they are not decisive.

“These reductions are mainly corrections from previous expectations rather than prices falling below original purchase levels. They serve more as a warning signal about price levels than an indication of a widespread downward trend,” she emphasised.

Nguyen Le