According to real estate experts, homebuyers in the capital are paying far more than Ho Chi Minh City residents, despite lower per capita incomes, due to poor development procedures, speculation and lack of supply.

Homebuyers in the capital are paying far more than Ho Chi Minh City residents despite lower per capita incomes

Exorbitant Hanoi prices

According to Nguyen Dinh Toan from the AZ Real Estate Company, a square metre in an apartment development in the capital could cost up to VND25 million (USD1,213) compared to just VND17 million (USD825.24) in Ho Chi Minh City.

In Hanoi, the prices of apartments located near the city centre are extremely high. A 59-square metre apartment in a project located in Thai Ha Street is priced at VND41.2 million (USD2,000) or VND39.6 million (USD1,922) per square metre respectively for a 101-square metre apartment.

At the Trung Hoa-Nhan Chinh apartment project in Cau Giay District, a 51-square metre apartment is priced at VND39.4 million (USD1,912) per square metre, rising to VND40.1 million (USD1,946) per square metre for a 158-square metre apartment.

Meanwhile, many apartment projects in Ho Chi Minh City are sold as low as just over VND10 million (USD485.43) per square metre. In Hanoi, apartment projects priced at VND30 million (USD1,456) are quite common.

Despite being recent reductions, land prices in Hanoi are still much higher than those in Ho Chi Minh City.

After cuts in price of VND5-7 million (US242.7-USD339.8) per square metre, land prices at the Kim Chung-Di Trach project still remain at roughly VND50 million (USD2,427) per square metre, with the Tan Tay Do project in Hoai Duc District at a comparative VND48-50 million per square metre. While the Tan Viet project in the district at around VND40 million (USD1,941) per square metre.

Adjacent houses on Le Trong Tan reach highs of VND120-130 million (USD5,82-6,310) per square metre.

In contrast, in Ho Chi Minh City, Him Lam-Tan Hung project has the highest price of VND84.3 million (USD4,092) per square metre, with other projects ranging from VND30 million and VND40 million per square metre.

Mrs Hoa, a bank clerk who recently moved to Ho Chi Minh City to live said, with VND1 billion (USD48,543), she could easily buy a house in the southern city, but it was next to impossible in Hanoi.

Reasons for the disparity

The explanation for lower Ho Chi Minh City prices according to Mr Toan related to cheaper construction procedures.

In Ho Chi Minh City, real estate investors can access bank loans; and therefore, they have to sell real estate projects at lower prices to pay off mature loans. In Hanoi, most of investors use their own capital and therefore are under little compulsion to sell at a cheaper price.

According to Nguyen Tran Nam, Deputy Minister of Construction, total real estate loans in 2010 reached VND224 trillion (USD10.87 billion), up 22% compared to 2009.

In Ho Chi Minh City, real estate loans accounted for up to 47% of all bank loans, compared to just 16% in Hanoi.

Ho Chi Minh City also boasts far higher supplies of real estate, with the southern city long being home to larger new urban developments, which the capital has only recently begun experiencing.

Former Trade Minister Truong Dinh Tuyen said Hanoi had also seen large numbers of people migrating to the city from other localities, pushing up demand for land and housing.

Mr Giang, a real estate agent, also said that Hanoi lacked enough suitable development land and that land lots and houses regularly increased in value several times between real estate agents before they had become available to customers.

Source: VTCNews/ Dtinews