Real Estate Fever in Hanoi: Just a Short Wave

The Hanoi real estate market has been quite volatile in recent months. Investors have created many “waves” to inflate the price in all market segments. Will the land fever continue or has it reached its peak? To learn more about this phenomenon, Vietnam Business Forum interviewed Dr Chau Thi Thu Nga, Deputy Director of Northern Real Estate Transaction Floor Network, which is affiliated with the Housing and Real Estate Market Management Department, the Ministry of Construction.

 

The real estate market goes up or down as a rule, but it is different from time to time and from market to market. In Ho Chi Minh City, the rise or fall depends more on the market and on consumer demand than in Hanoi. Ho Chi Minh City property prices periodically rise and fall, but this is not the case for Hanoi where the price only stays unchanged or goes up. The property price is escalating day after day in Hanoi, especially in expanded areas.

 

After the outline for Hanoi construction until 2030 and vision to 2050 was released, land prices in Chuong My, Quoc Oai, Thach That, Son Tay and Ba Vi districts and areas along Lang - Hoa Lac Motorway, National Road 32 and National Road 72 climbed daily, and successful deals also increased. But, many investors are only aiming for short-term profit. Cash flows are mainly channelled into low-priced garden land, agricultural land and farmland, as investors expect a quick turnover with large profit margin, ignoring fears of a bubble burst. The land fever in western Hanoi exerts a strong influence on prices in other localities.

 

In 2010, the real estate market revived spectacularly, with many projects kicked off or offered to the market. With the high demand, many dealers have joined the action, creating a “wave”, leaving the market unstable and potentially uncontrollable. In reality, homebuyers or land buyers for residence usually cannot purchase directly from the source, but through intermediaries. Meanwhile, investors are unable to reach the end-users. This is an obstacle for the transparency and stability of the property market.

There are many varying assessments of the cause of the boom. Investor’s cash flow comes and goes according to the gold and stock markets. When these two markets are at risk they shift investments into the real estate market, because traditionally this channel is safe and profitable. Currently, the property market is the most attractive to investors, although the market is now in a fever.

 

Besides, the building height limit in four business districts of Hoan Kiem, Hai Ba Trung, Ba Dinh and Dong Da has also caused a rise in other localities. Another reason is a better traffic conditions in outlying districts. The completion of main roads like Lang - Hoa Lac Motorway and National Road 32 is also a reason for growing land prices in surrounding areas.

I think this is just a short wave. This fever will not last for a long time, because it will be eventually driven down by the law of supply and demand. Success will come to intelligent persons. They should sell at a good time.

 

In fact, the real estate market in Hanoi has begun to cool down. From the end of this year, there may be small waves, but not as big as we have seen.

The operation of real estate trading floors is considered another step toward increasing the transparency and linkage of the property market. It helps create a fair playing field for businesses and people when there is a demand for real estate transactions.

 

In fact, real estate trading floors are encountering difficulties as they lack goods, while in reality deals are plentiful. People do not go to trading floors because they have little interest in the services and benefits they offer. This is a general difficulty of real estate transaction floors.

 

Hopefully, in the coming time, people’ interest in property trading floors will increase, the professionalism of trading floors will satisfy customers, the legality and transparency of the real estate market will be enhanced, and people will be informed of the transaction process on real estate exchanges.