Hot real estate prices not a good sign for Vietnam: association exec

Recent fluctuations in real estate prices in suburban areas and the surge in land auction prices are issues of concern, says Nguyen Van Dinh, vice chairman of the Vietnam Real Estate Association (VNREA).

Dinh said at the Vietnam Investment Forum 2025 in Ho Chi Minh City on Friday that while the real estate market is becoming more dynamic, it is also "heating up" and showing signs of a potential "fever.”

In the first three quarters of 2024, nearly 40,000 units were launched, and the absorption rate was high, too. However, compared to the 2018-2019 period, these numbers remain modest. “This suggests that while there is some recovery, the market has yet to return to a normal state."

He cited other experts as identifying two primary factors that have contributed to the real estate market’s stagnation in recent months: institutional issues, which have made it difficult to develop new real estate projects, leading to a lack of supply entering the market; and capital congestion, which has affected financing for real estate development.

The government is aware of the issues and actively pursuing institutional reforms, Dinh said.

"Recently, the National Assembly passed four important laws, including the Land Law, the Housing Law, the Real Estate Business Law (which took effect August 1), and the Law on Credit Institutions. These reforms are intended to restore confidence in the market and help alleviate bottlenecks in real estate projects,” he added.

As a result of these changes, the market is beginning to show signs of recovery, with activity gradually increasing in terms of supply, demand and transactions.

Consequences of high prices

Real estate prices in HCMC have been rising steadily since 2019; while in northern Vietnam, significant infrastructure investments over the past five years have spurred economic growth and urban development, driving up demand and subsequently pushing real estate prices higher. However, a supply shortage continued to remain a factor behind rising prices.

"Hanoi, for example, has had no new projects approved in the past five years. With strong demand and limited supply, it is no surprise that prices have skyrocketed. This is simply how the market works," Dinh said.

The recent spike in prices in suburban areas and surge in land auction prices are not positive signs for the market. "The market is showing signs of imbalance, with a lack of supply and declining quality," he noted.

Currently, the supply in Hanoi remained limited and largely driven by speculative investment rather than real housing needs of the public, Dinh added.

He went on to say that the system has not gone far enough in encouraging development of affordable housing for low-income buyers or small investors.

Although efforts are being made to adjust policies, the current period is marked by a significant shortage of affordable commercial housing.

"We should not mistake price increases for signs of a healthy market. Rising prices create several problems: people who genuinely need housing will find it increasingly difficult to afford own homes; and rising costs, particularly production and investment costs, will make it harder for real investors and businesses to acquire land. When they do gain access, the increased costs will drive up overall prices, but the shortage of affordable housing to meet real needs will persist.”