House prices soar, affordable housing disappears
In 2024, housing supply was recorded as the lowest in the past 5 years, most of the projects opened for sale during the year were in the mid- and high-end segments, leading to a not very positive trading situation.
The 2024 real estate market overview report recently released by real estate consultancy Avison Young shows that both Ho Chi Minh City and Hanoi are lacking apartments priced under VND40 million/m2. The average selling price of primary apartments in Ho Chi Minh City is approaching the high-end segment, averaging from VND72 million/m2, while this figure in Hanoi is around VND70 million/m2.
The report of the Ho Chi Minh City Real Estate Association also shows that in the real estate market, the high-end housing segment continuously accounts for an increasingly large proportion.
“Housing prices are still high, beyond the financial capacity of the majority of people with average and low incomes in society. Typically, the price of high-end housing in 2024 is very high, averaging up to 9.39 billion VND/unit. This is only the primary housing price registered by the investor with the Department of Construction when establishing the investment project, so the actual selling price of houses on the market is certainly even higher,” said Mr. Le Hoang Chau - Chairman of the Ho Chi Minh City Real Estate Association.
Talking to reporters, many real estate investors said that it is not that they do not want to build affordable housing because this is a segment with high liquidity. But in the current context, the profit margin when doing this segment is quite low, only about 15%. If capital is stagnant or slow to sell for 1-2 years, investors will suffer losses. Meanwhile, high-end projects still have good liquidity because of high investment demand, making investors less interested in mid-range and affordable housing.
Besides, central land fund is increasingly scarce, input costs, especially land costs, are increasing.
Forecasting housing price developments in 2025, many experts believe that prices will likely continue to increase due to the impact of the adjusted land price list, with an expected increase of 15-20% according to the previous judgment of the Ministry of Construction.
Restructuring the market
Ms. Giang Huynh - Director of Research and S22M Savills Vietnam - stated that there are many main reasons for the lack of supply in the market. First, the legal procedures related to project approval are facing many difficulties. The long project implementation time has limited the ability to bring new products to the market. This directly affects the primary housing supply in Ho Chi Minh City, at the lowest level in the past 5 years.
Next, land and construction costs are rising as investors also face difficulties in accessing clean land.
Ms. Giang Huynh shared that it is expected that in 2025, the supply will show signs of gradual improvement, but the scale will still be modest compared to the period of 2018-2019. The supply structure will still mainly belong to the mid- and high-end segments, while low-cost and affordable housing will continue to be scarce because the land fund for low-cost housing is increasingly limited. This means that housing prices are unlikely to decrease significantly, especially in central areas and new urban areas well connected to the center.
Mr. Le Hoang Chau - Chairman of the Ho Chi Minh City Real Estate Association - said that legal policies are delayed in coming into practice, plus the delay of commercial housing projects often takes 3-5 years.
Therefore, to increase the supply of commercial housing products in 3-8 years, in addition to perfecting land access methods to increase project supply, it is also necessary to promote the restructuring of the real estate market.
The Ho Chi Minh City People's Committee has recently announced a report on the planning of Ho Chi Minh City for the period 2021-2030, with a vision to 2050. The focus is on developing affordable housing for workers and low-income people to access housing.
By 2030, Ho Chi Minh City strives to have an average housing floor area of 26.5m2/person; 358 million m2 of floor, including 192 million m2 of existing housing; repair and new development of about 166 million m2 of floor. Of which, social housing is about 4.98 million m2, individual housing built by the people is about 63.9 million m2, commercial housing and other types of housing are about 97.12 million m2. At the same time, affordable housing is expected to account for about 60% of the total number of apartments in new housing construction projects.
