New apartments under $2,300 per sqm gradually disappear in Vietnam

New apartments priced under VND40 million ($1,530) per square meter have completely disappeared from the markets of major Vietnamese cities in recent years, and now those below VND60 million ($2,295) are almost non-existent.

Positive signs of Vietnam's real estate market entering a new cycle were evident in Q2 and the first half of this year. Housing supply increased significantly, accompanied by a corresponding rise in transactions, while housing demand remained high, especially in major cities such as Hanoi, Ho Chi Minh City, and Danang.

In addition, the number of real estate businesses returning to the market in the first six months of the year rose by 76% year-on-year. Newly established companies also increased by 15%, with total registered capital up 20%. On average, around 430 new property firms were established each month.

According to the Vietnam Association of Real Estate Brokers (VARS), the housing real estate market recorded over 36,000 new units in Q2, 2.5 times more than the previous quarter and a 90% increase year-on-year.

In total, the first half of the year saw 64,000 housing units supplied, equivalent to about 80% of the total in 2024. Of these, more than 51,000 were new products, with the remainder being inventory.

Hanoi leads apartment price growth

The supply continues to be led by major developers, with many large-scale projects restarted following the removal of legal obstacles, especially in the southern region.

However, the supply structure remains imbalanced, particularly in major cities like Hanoi, Ho Chi Minh City, and Danang where housing demand is the highest. The market is dominated by high-end and luxury apartments, with almost no commercial apartments priced below VND60 million ($2,295) per sqm.

Newly launched apartment supply in the first half of the year surged, doubling year-on-year, but the supply structure showed little change, continuing to exhibit a mismatch as the number of projects priced over VND80 million ($3,059) per sqm increased sharply.

During Q2, approximately 27,000 successful transactions were recorded across the market, with an absorption rate of 54%, up 9 percentage points from the previous quarter.

The absorption rate for newly launched products was 61%, roughly the same as last quarter, with over 22,000 transactions. Apartments accounted for more than 56% of total transactions, while low-rise housing projects experienced slower sales due to high prices.

In total, around 40,000 transactions were recorded market-wide in the first half of the year, twice that in the same period last year. Many projects with sales opened benefited from "piggybacking" on large projects and the mergers of cities and provinces.

According to Pham Mien, deputy director of the Vietnam Real Estate Market Research and Evaluation Institute, the combination of uncontrolled capital inflows and economic recovery, along with urbanization, has significantly boosted housing demand across all segments. Strong public investment and improving infrastructure have pushed real estate prices higher, creating a new price floor.

Hanoi continued to lead the nation in apartment price growth, followed by Danang and Ho Chi Minh City. In Q2, the average selling price of apartments in the capital city reached VND75.5 million ($2,888) per sqm, up 7.7% from the previous quarter and a staggering 87.7% increase from the 2019 baseline. The price hike was mainly due to developers continuing to release inventory at adjusted higher prices.

The secondary market also saw a rebound as newly launched projects were priced above VND75 million per sqm, and a sharp rise in projects expected to launch at over VND100 million ($3,825) per sqm was observed, although secondary market liquidity did not significantly improve.

In HCMC, the average price was VND77.1 million ($2,949) per sqm, slightly higher than the previous quarter and up 48.3% from the 2019 baseline. In Danang, the average price reached VND66.4 million ($2,540) per sqm, up around 5% from the previous quarter and a strong 69.8% increase from the baseline.

Mien noted that secondary market liquidity was only recorded in apartments in well-established mega urban areas with prices around VND50 million ($1,912) per sqm, or luxury apartments in central areas. Real estate prices are expected to continue rising in the short term due to high investor profit expectations.

In the second half, the property market is expected to maintain its strong recovery momentum. However, it still faces significant challenges," she said.

"Housing prices continue to rise because many projects, after having their legal hurdles resolved, are burdened with increased costs - estimated at around 11% for each year of delay - not to mention growing pressures from land use fees and financial expenses. Furthermore, young people and middle-income earners’ limited access to housing reduces real demand, which in turn impacts the broader economy, she added.

Concerns over a new asset bubble

Sharing a similar view on the real estate market in the first half of the year, Nguyen Hoang, deputy director of Eagle Academy, noted that the market has recovered strongly in both demand and new supply, as evidenced by a series of high-profile project launches, even though supply remains less diverse than in 2018-2020.

However, property prices overall continue to rise, affordable housing remains scarce, social housing lacks breakthroughs, resort real estate is still sluggish, and shophouses are less attractive than before.

Currently, the government is determined to achieve a GDP growth rate of 8% for the whole of 2025, having already reached 7.52% in the first half. This means significant pressure and challenges lie ahead for the second half. Macroeconomic factors such as exchange rates, inflation, interest rates, and loose credit growth are closely tied to the real estate market and raise concerns about the formation of a new asset bubble.

At this point, Hoang questioned how two-tier local governments would operate to boost the real estate market, particularly in resolving long-standing legal bottlenecks in many projects. Despite being frequently discussed, progress remains slow, hindering the release of new supply.

Additionally, the application of new land pricing starting from January 1, 2026, is expected to significantly impact real estate prices. Recently, in some localities, sharp changes in land prices when converting land use purposes have caused concern among residents.

“In the short term, it’s difficult to make specific forecasts for the market in the second half of 2025,” Hoang stated. “However, the market is unlikely to see a boom but also shows no signs of decline. It is expected to maintain the same purchasing power as in the first half, with new supply absorption at around 50-60%.”