More and more apartment buildings, both high-end and regular housing models, are springing up like mushrooms in Ho Chi Minh City and other major cities in Vietnam. According to the Ministry of Construction data, 40 new commercial housing projects were launched this year, an increase of 41% from last year’s.
However, that number is relatively low compared to the past years’ construction data. But the prices continue to go high.
Ho Chi Minh City’s apartment prices went up by 8% year on year. If you’re keen on buying, you couldn’t find any units around VND2 billion ($85,000) on the market. Prices now range from as low as VND36 million ($1,530) per square meter to VND300 million ($12,752) each. On the other hand, Hanoi also increased by 13% year-on-year, up for four consecutive years.
HCMC’s Thu Duc City prices grade A apartments at VND55 million ($2,337) per square meter, catching up with District 9's VND100 million ($4,250) rate per square meter.
Meanwhile, prices of detached houses and villas have gone up 2-2.5-fold amid rising demands. In addition, the segment of villas and detached houses has set up a new price range at VND700 billion ($30 million) per house, a survey from the DHRA Vietnam stated.
The surge in housing prices isn’t just happening in the north and south. Da Nang, the central part of the country, also saw its housing prices jump 2-4x compared to the pre-pandemic period.
The real estate market is a good example of how supply and demand work within an industry. When the demand for housing is high but supply is low, home prices often rise. And if there’s an abundance of housing available in a market, developers may lower their prices due to less demand in the market.
What’s happening in Vietnam is while there’s no clear data on the demand, there’s a relatively low supply that lets prices continue to go up.
Can Van Luc, an economist and a member of the National Financial and Monetary Policy Advisory Council, told The Hanoi Times, “There remains inconsistency in regulations related to real estate management, along with the lack of clear policies on the transparency and publicity of the planning process.”
He added that real estate projects have complicated investment procedures while the sector’s digitalization has been slow compared to other economic fields.
Nonetheless, Le Xuan Nghia, an economist and a member of the National Financial and Monetary Policy Advisory Council, recognized that the country’s strong economic performance has somehow eased concern regarding the real estate or securities markets.
“Government’s efforts to keep macro-economic stability and low-interest rate environment would keep the real estate market intact and eventually recover,” he told The Hanoi Times.
Overall, both economists believe the market will heat up in the remainder of the year. All thanks to the bright economic outlook, the Government’s push for major infrastructure projects, and high demands for housing.