Vietnam's housing price increase rate is higher than the US, Australia, Japan
Dr. Can Van Luc - Member of the National Financial and Monetary Policy Advisory Council said that the situation of increasing real estate prices continues. In the period of 2019 - 2024, real estate prices in Vietnam have increased by 59%, higher than the US (+54%), Australia (+49%), Japan (+41%) and Singapore (+37%).
"With the current price increase, it will take normal civil servants nearly 26 years to buy an apartment" - Mr. Luc spoke at the Executive Committee, Standing Committee Conference and meeting with annual members in 2025 of the Vietnam Real Estate Association (VNREA).
According to Mr. Luc, Vietnam is increasingly falling behind in terms of housing access. Of which, there are at least 6 main reasons why housing prices in Vietnam have been pushed up in recent years.
Firstly, prolonged legal problems along with fearing responsibility from authorities have delayed the project approval process, leading to a scarce housing supply.
Second, the input costs of real estate projects are increasing, including land rent or land use, site clearance costs, financial costs, construction material prices, construction investment costs, etc.
Third, the imbalance between supply and demand is clearly shown in the fact that many businesses only focus on developing the high-end segment (high-yield) while the supply of affordable and mid-range housing, including social housing, is lacking. This has caused the average price level to skyrocket.
Fourth, the situation of "inflating prices", "taking prices" or "tsucking water in the rain" still exists in the market, causing prices to be pushed to levels that do not properly reflect real value, typically unusual land auctions and the phenomenon of thieves manipulating the social housing market.
Fifth, speculative activities are still popular. A survey by Batdongsan.com.vn in 2024 shows that 86% of real estate buyers have only held a house for less than a year, clearly reflecting short-term investment and profitable buying and selling.
Sixth, the fact that Vietnam has not yet applied property tax (real estate ownership tax) while the transfer and lease tax is quite low also contributes to making it easier for cash flow to flow into this market, pushing prices up but lacking sustainability.
Supply tends to improve
Dr. Can Van Luc said that in 2024, the GDP of the real estate business will increase by 3.34%, improving compared to 0.24% in 2023 but not really breaking through; the construction sector will grow by 7.87%, higher than the previous year's 7.06%, but not too large. In the first quarter of 2025, the recovery momentum continued to be maintained but not really took place strongly.
Notably, the new commercial supply in the first quarter of 2025 increased 3 times compared to the same period in 2024, though it was only 50% compared to the previous quarter. Apartment transactions, individual houses and land plots also prospered when the number of transactions doubled the same period, but the scale of transactions was only half the fourth quarter/2024. In particular, although the supply tends to improve, it has not met the market demand.
Mr. Luc said that new motivations from the 2024 Land Law, the 2023 Housing Law, the 2023 Real Estate Business Law, Decree 35/2022/ND-CP on industrial park and economic zone management, along with increased infrastructure investment, are opening up new expectations for the market.
