Nguyen Hung has just bought a 40-square-metre three-storey house at VND3.50 billion down a small lane in Dong Da District.

Hung said he wanted an apartment but had failed to find one, so he began looking for a house instead.

"Our house lies in a small lane that cars can’t access so it's a bit inconvenient," he said. "But with our limited budget, we have no other choice. The only good side is that it is located near our office."

The man said prices for apartments in Hanoi have risen sharply recently.

"I've visited many projects in the city and was shocked at the price hike," he said. "An apartment of over 70 square metres in Nam Tu Liem District is being offered for sale at VND5.30 billion. Those used for 5-7 years in Thanh Xuan and Dong Da districts are also priced at over VND5 billion.

Meanwhile, our 40-square-metre house with three floors will have a total area of over 100 square metres. It's much cheaper than an apartment."

Nguyen Ngac Tam, a real estate agent in Hanoi said that sales in small-sized houses in the city have increased recently amid a shortage of apartments.

"Small-sized houses priced below VND5 billion in small lanes in Ha Dong, Hoang Mai, Hai Ba Trung, and Dong Da are selling very well," Tam said.

A report by real estate website Batdongsan.vn said that while prices of many other real estate groups have remained low, house prices have continued rising by between 2 - 9 percent compared to the same period last year.

"Houses in Tay Ho District have seen the highest rises of over nine percent, while thoses in Dong Da, Ha Dong, Hai Ba Trung, and Hoang Mai have risen by 4-8 percent," the report said.

The report also added that houses priced at between VND3-5 billion have seen the highest number of transactions.