However, the price level was not a surprise because it was nearly the same as the prices of other land plots in the same and neighboring areas.

The 40 kilometer Van Cao – Tran Duy Hung – Thang Long Boulevard route that links with Ba Vi is an example. On Van Cao street near the West Lake, the land is traded at VND500-900 million per sq m. On Tran Duy Hung, the land prices at transactions have been reported at VND400-600 million per sq m. Meanwhile, in Vinhomes residential quarter near Big C Supermarket, the villas there are offered at VND1 billion per sq m.

The prices are lower in nearby areas. In Song Phuong embankment area, and land is traded at VND120 million per sq m. Meanwhile, the land plot 3 kilometers away, is quoted at VND200 million.

Therefore, the award price of VND133 million per sq m in Hoai Duc is reasonable, if noting that it is located close to the Belt Road No 4 which is under execution, and near Thang Long Boulevard and just 11 kilometers from Big C.

The prices are also extremely high in the apartment market segment in Hanoi. No one can find apartments with the price of VND40 million per sq m nowadays. In many areas, the prices have surged by 2-3 times compared with several years ago, now traded at VND80 million-100 million per sq m.

Nguyen Van Dinh, deputy chair of the Vietnam Real Estate Association, has commented: “The prices are increasing so sharply.”

A question has been raised about housing prices in Hanoi soaring when the national economy and the real estate market in particular are still facing difficulties.

“The short supply in Hanoi is the reason behind the unceasing price increases,” Dinh said.

In the last few years, the number of projects approved and implemented in Hanoi has been modest because very few projects have been licensed. This is attributed to the ‘fear of responsibility’ of watchdog agencies when approving real estate projects.

From the beginning of the year to September 2024, only nine projects recognized as meeting the requirements to be put into business. It is expected that after 2025, Hanoi would have 26 projects to be completed with 9,900 apartments in supply. In addition, there are 36 projects with 49,000 apartments following administrative procedures in some districts.

Meanwhile, the population of the capital city is predicted to increase by 200,000 each year, equal to the population of one large district. A report in 2019 showed that in 2014-2019 alone, Hanoi had 1.3 million people more, including 1.2 million in inner districts.

Hanoi has expanded geographical boundaries for 16 years and zoning plans have been completed, but the implementation has been very slow. The population density keeps increasing, especially in inner districts. The population density in Hanoi is 2,398 people per square kilometer, or 8.2 times higher than the average density of the country. 

The figure is even higher in the Old Quarter, 39,830 per square kilometer, or 138 times higher.

As such, while the population keeps escalating rapidly, the housing supply doesn’t increase proportionally. Everyone wants to own land plots and apartments in Hanoi for themselves, children and grandchildren. Meanwhile, the supply comes in dribs and drabs. Therefore, the real estate price escalation is inevitable.

The land market in Vietnam is still fledgling and since it lacks necessary regulations, it is ‘distorted’, say experts. 

Solutions

Developing the capital city in accordance with the plans approved, developing rapidly the two independent cities, including one in the north of Red River (Me Linh, Soc Son and Dong Anh) and one in the west (Hoa Lac – Xuan Mai) need to be done soon.

It is also necessary to build urban railways that connect the cities which allows people to travel more easily.

On the Thang Long Boulevard route, the land for urban railways has been prepared and there is no need to spend time on compensations for site clearance. Therefore, it would be better to choose private investors to build up the route.

It’s also necessary to increase the supply by accelerating the approval of new projects.

Tu Giang