No budget apartments in Vietnam, chronic supply-demand gap widens

Vietnam saw no supply or transaction of low-cost apartments priced below VND25 million ($988) per square meter in the third quarter, says a real estate report by the Ministry of Construction.

The nation’s property market is increasingly short on low-end apartments, widening a decade-long gap between actual demand and housing supply.

Mid-end apartments, priced between VND25 million and VND50 million ($1,976) per sqm, dominated both transaction and supply, followed by high-end apartments priced above VND50 million per sqm, the report says.

For example, in Hanoi, the Vinhomes Ocean Park project in Cau Giay district offers “The Zurich” apartments for VND46-55 million ($1,818-$2,174) per sqm, while prices at Lumi Prestige in Nam Tu Liem district starts at VND69 million ($2,727). The Ninety Complex in Dong Da district has listed apartments for VND60-75 million ($2,732-$2,965) per sqm.

Overall, Q3 prices of new apartments in Hanoi rose by 4-6% from Q2 and by 22-25% compared to the same period last year.

In Ho Chi Minh City, the southern economic hub, the Diamond Centery project in Tan Phu district offers apartments for VND61-73 million ($2,411-$2,885) per sqm, while the Urban Green complex in Thu Duc city has prices of VND52-60 million ($2,055-$2,372).

In district 7, the Aurora Phu My Hung development lists units for VND88-90 million ($3,478-$3,558) per sqm.

Apartment prices are high in other areas, too. The Lumiere Spring Bay project in Hanoi’s neighboring province of Hung Yen lists units for VND60-73 million ($2,372-$2,885) per sqm.

In Binh Duong province, adjacent to HCMC, the Green Tower Di An project offers apartments for VND50-60 million per sqm, while the Grand Mark Nha Trang in the central province of Khanh Hoa prices units at VND45 million ($1,779).

The Construction Ministry report attributes the rise in prices to rising land-related costs and insufficient supply of affordable housing. The shortage has driven prices up by as much as 35-40% in some areas, it notes.

Vo Hong Thang, director of consulting services & project development at real estate service provider DKRA Group, told The Investor that the mismatch between housing supply and demand has been a persistent issue for the past decade.

Project licensing challenges have placed pressure on developers and constrained new supply, he said. For instance, HCMC only saw one newly permitted project in Q1/2024. Additionally, several legal issues affecting stalled projects remain unresolved.

Although three new real estate laws took effect in August, guidelines are still needed for practical enforcement, he said.

According to a report by the Vietnam Association of Realtors (VARS), housing supply in Vietnam fell 25% quarter-on-quarter to 22,412 units in Q3/2024, but the number marked a 60% increase year-on-year.

In the first nine months of 2024, a total of 38,797 new units were put up for sale. Of these, 70% were apartments, predominantly those priced at over VND50 million ($2,004) per sqm.