Apartment prices continue to fall in Hanoi

In recent times, many owners of apartments in building complexes in Hanoi have been involved in lengthy disputes with the management over disagreement of service charges, for which the Ministry of Construction has issued a guide code for Hanoi.

Accordingly, the Hanoi People's Committee will be responsible for issuing a ceiling or bracket service charge. The condominium management, organizations and individuals concerned will comply with the provisions defined in the guide code.

In the case of condominium service charges, after calculating correctly, the fees were higher than the service charges put forth by the Hanoi People's Committee. The final amount must be agreed upon by more than 50 percent apartment residents and more than 50 percent board members.

Furthermore, the application for the changed fee must be reported to the provincial People's Committee and the Ministry of Construction for monitoring and inspection.

Meanwhile, prices of apartments in Hanoi continued to decline in the third quarter, reflecting the prolonged stagnation in the city's real estate market.

According to a quarterly survey of the capital city's property market conducted by property services firm Savills Vietnam, secondary asking prices decreased in all districts, down by 9 percent from the previous quarter in Tay Ho District, 6 percent in Cau Giay, and 5 percent in Hai Ba Trung.

The declining values were also related on such key factors as infrastructure development and construction progress of each project, Savills announced.

Some local developers expect to settle for smaller profit margins in order to offer apartments at more affordable prices, including smaller units at prices of less than VND15 million (US$718) per square meter. Some have joined social housing programs or sold entire residential buildings to government agencies or to major companies looking for accommodations for their employees.

An Sinh Mỹ Đình apartment in Tu Liem district Hanoi

End users were now the main buyers in the apartment market, which investors largely abandoned this quarter due to the market's low liquidity. Developers have also taken to offering shell apartments to further reduce the prices offered to buyers, said the head of Savills' research division, Do Thi Thu Hang.

CB Richard Ellis Vietnam's third-quarter report on the Hanoi property market showed similar trends.

"Secondary asking prices continued to drop by 5 percent quarter-on-quarter to an average of about $1,730 per sqm, following a downward trend that started in the last quarter of 2011," said CBRE executive director Richard Leech.

Developers have been revising business strategies in terms of target customers and types of products offered, putting greater efforts into sales and customer service and showing a willingness to compromise on prices and payment structures, he said.

"Looking ahead, in the current buyer's market, the buyers' purchasing power and mentality will drive the market recovery," Leech said. "A dim economic outlook through to 2013 will further dampen buyer confidence, and the flight to safety will strengthen savings at the expense of investments.”

Source SGGP, Translated by Dan

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