Vietnam housing prices continue to surge

Post-pandemic economic recovery and limited supply have continually driven up housing prices in Vietnam.

The average price of apartments in Ho Chi Minh City hit VND75.4 million ($3,300) per square meter in the first quarter, up 8% quarter-on-quarter and 27% year-on-year, according to a Cushman & Wakefield report.

The property services provider said apartment prices have continuously increased over the past 10 years, mainly due to the increase in land prices in the context of limited land funds and the rising cost of construction materials. The market has also seen many products in the luxury and ultra-luxury segments launched, that boosted the average price.

The price of townhouses in HCMC is three times higher than in neighboring provinces. Particularly, the average price in the city is VND173 million ($7,580) psm, up 30% quarter-on-quarter and 42% year-on-year, according to the firm.

Savills Vietnam said the price of grade C apartments in HCMC in the final quarter of last year rose 27% against 2020 to VND56.5 million psm.

According to the Ho Chi Minh City Real Estate Association (HoREA), developers have been encountering legal problems for years. HoREA, in a letter sent to relevant authorities in late March, proposed to remove legal obstacles or ease construction procedures for 57 developers, with 64 commercial housing and social housing projects.

The city is estimated to need an additional 160,000 affordable apartments by 2030 for its growing population and demand, according to the Department of Construction.

In Hanoi, housing prices have risen the most in five years, driven up by limited supply and partially by inflation fear. According to CBRE, the average price of a new apartment in the capital city increased by 13% year-on-year to $1,655 psm in the first quarter. In the secondary market, it went up 9% to $1,278.

CBRE forecast a new supply of 26,000-28,000 units this year in Hanoi, but said the affordable segment will continue to face a scarcity.

To support the country’s post-pandemic economic recovery, the government has worked out a $15 billion stimulus package. Research company Vietnam Report JSC said the package will bring positive effects to the Vietnamese real estate market in the short term, thanks to the improvement of people's purchasing power and their future income expectations.

Experts said the support package, set to allocate more than one third for infrastructure development, will not only have a direct impact on the real estate market in the short term, but also work as a driving force for the market development in the coming years.

Vietnam Report quoted Knight Frank’s Wealth Report 2022 as saying that in the next five years, the growth of the super-rich in Vietnam is forecast to reach 26%, on par with Hong Kong and Taiwan. This is the basis for many investors to continue to pursue the high-end and luxury segment, it added.