HCMC apartment prices skyrocket

The average price of apartments in Ho Chi Minh City reached VND91 million ($3,565) per square meter in 2024, up 33% year-on-year, due to the high prices of new supply and the increase in prices of old projects.

A report from property consultancy Savills showed that the HCMC real estate market closed 2024 with some positive signals, opening up a promising start for 2025 and beyond.

The primary supply increased by 10% year-on-year to nearly 11,900 units. The supply of grade-C apartments dropped significantly by 45% year-on-year from 2020, to about 1,300 units in 2024.

The primary supply of apartments priced below VND50 million ($1,959) per square meter decreased by 20% year-on-year, making up only 15% of the total primary supply.

Sales increased by 29% year-on-year to 8,000 transactions, led by grade-B apartments which accounted for 67%, followed by Grade C at 28, and Grade A at 5%.

Transactions of high-end apartments priced over VND80 million ($3,135) per sqm surged by 2,118% year-on-year, making up 76% of total transactions.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association (HoREA), stated that the property market has overcome the most difficult period in 2024 and is transitioning into a recovery phase, with growth month-on-month, quarter-on-quarter and year-on-year.

However, the real estate business revenue in January 2025 in HCMC only reached VND22,932 billion ($898.4 million), a decrease of about 3.3% compared to December 2024, he noted.

"Our economy has not yet recovered as expected, as shown clearly by the General Statistics Office's data. Therefore, it can be predicted that the real estate market in HCMC and across the country will still face many challenges in 2025, and will serve as a transitional year toward a new phase of healthier and more sustainable development starting in 2026."

He assessed that in 2024, the HCMC real estate market continued to face the shortage of housing project supply, leading to a shortage of housing products. The most concerning issue is that since 2021, there have been no affordable commercial housing units priced under VND30 million ($1,175) per sqm in new residential projects, and there is a severe shortage of social housing.

On the other hand, the high-end housing segment from 2020 to 2023 consistently dominated the market, with about 70% of new housing units launched each year being high-end, and it is worrying that in 2024, for the first time, all projects launched belonged to the high-end segment.

"The market sees no affordable commercial and mid-range housing, leading to an unbalanced and unsustainable market development, like an inverted pyramid," he stressed.

The HoREA chairman noted that housing prices have continuously increased over the past years and remain at very high levels, with high-end apartments in 2024 reaching up to VND90 million ($3,526) per sqm, exceeding the financial capacity of the majority of middle-income and low-income urban residents.

Over 10,000 apartments to be launched

According to Savills, in 2024, both supply and market sentiment improved, but prices remained high. Therefore, demand continues to shift to neighboring provinces with more affordable prices and better infrastructure development.

Giang Huynh, head of research & S22M at Savills HCMC, stated that the real estate market in the southern economic hub is currently facing a land shortage, and project development costs are high. This forces developers to choose product segments that ensure minimum profitability.

"Particularly, if land is located in strategic areas and near the city center, developers will prioritize the mid- to high-end segments to optimize financial outcomes. Supply and demand also have a significant impact, and the limited supply has pushed the prices of high-end products higher.

"In the short term, the HCMC market will still focus on mid- and high-end segments. If buyers are looking for affordable products, they will need to move to areas further from the city center. Market balance can only be established when supply is unlocked. However, this requires more land in the city center and suburban areas," she commented.

In 2024, apartments priced at VND50 million ($1,959) per sqm or lower accounted for only 18% of total sales, a sharp decline compared to 2020, when this segment made up nearly 50%. The number of transactions also decreased significantly, with a 39% decrease every year since 2020.

"The scarcity of affordable apartments has led buyers with moderate budgets to look for markets in neighboring areas like Binh Duong, Dong Nai, and Long An, where apartment prices range from VND30-40 million ($1,567) per sqm. This demand shift has led to significant growth in apartment transactions in Binh Duong, with more than a 200% year-on-year rise," she explained.

Savills forecast that in 2025, more than 10,000 apartments are expected to be launched, with grade-B apartments accounting for 54% of the total. By 2027, future supply will reach approximately 46,000 units from 69 projects. Thu Duc city is expected to make up 52%, Binh Tan district 11%, and District 7 10%.