Vietnam's property market sees mixed prospects in Q2: analysts

Vietnam’s real estate market is expected to see positive developments in Q2, with developers launching new projects, but uncertainties from U.S. trade policies may influence market sentiment and consumer confidence, said analysts.

Moreover, the high offering prices of new projects may weigh on market liquidity, according to Cushman & Wakefield.

Apartment remains bright spot despite price surge in Q1

The first quarter of 2025 ended with somewhat more optimistic signs compared to 2024.

Notably, the apartment segment remained a bright spot. However, primary prices continued to rise despite sluggish liquidity. A supply-demand mismatch persisted while there was no significant improvement in new project launches.

According to Cushman & Wakefield’s Q1 market report, approximately 2,392 new units were launched in Ho Chi Minh City, a 12% decrease from the previous quarter. Supply remains concentrated in the premium and luxury segments.

Geographically, new supply was distributed across key areas: 15% in the West, 19% in the South, 27% in the East, and 26% in the central districts.

The average primary price hit a new record of $4,691 per square meter, up nearly 28% from late 2024 and 47% year-on-year.

A separate report from consultancy DKRA Group stated that HCMC had 113 apartment projects with a total of 12,892 units in Q1. Sales volume reached 2,586 units, up 56% year-on-year, with supply mainly located in HCMC and its neighboring Binh Duong province. New supply surged 75%, with Binh Duong accounting for 49% of all new launches.

Luxury apartments dominated the market, making up 72.1% of the primary supply in HCMC, while mid-end (grade B) and affordable (grade C) apartments remained prevalent in neighboring provinces.

Primary prices rose by 2-5% across projects, with some developments seeing increases of up to 10%. In Q1, the highest primary apartment prices in HCMC reached VND493 million ($18,960) per square meter, with the lowest at VND37 million ($1,423).

The respective figures were VND60 million and VND28 million per sqm in Binh Duong, VND61 million and VND35 million in Ba Ria-Vung Tau, VND41 million and VND33 million in Dong Nai, and VND31 million and VND21 million in Long An.

Despite some positive signs, rising costs of construction materials, labor, and interest rates are keeping prices from declining. These factors contributed to the 2-5% increase in primary prices over Q4/2024.

Trang Bui, country head of Cushman & Wakefield Vietnam, attributed the continued price increases in HCMC to the dominance of high-end and luxury projects, with most of the 2,392 newly launched units priced over VND100 million ($3,845) per sqm and developed by major names like Masterise Homes, Vinhomes, Gamuda Land, and Keppel Land.

However, this price surge led to a stark decline in market liquidity. Only 1,101 apartment units were successfully transacted in Q1, a 58% drop from the previous quarter. Even with incentives such as extended payment terms (up to three years) and discounts of 10-25%, demand did not pick up, as prices went beyond most buyers’ budgets.

Trang Bui warned that if prices continue rising, HCMC’s apartment market may face a liquidity crisis. As a result, buyers may shift their focus to suburban or neighboring provinces where prices are more affordable.

Outlook for Q2 and beyond

In Q2, new housing supply in HCMC and surrounding areas is expected to recover, reaching 3,000-4,000 units. HCMC and Binh Duong will continue to lead apartment supply, while land plots and villa/townhouse projects will dominate in neighboring provinces.

Luxury apartments will remain the core offering in HCMC, but the market continues to suffer from a shortage of affordable housing (grade C), which addresses real homeownership demand.

Demand is expected to gradually recover, with apartments remaining the main driver. Primary prices may continue edging upward, sustained by high input costs. Many developers are preparing to launch new projects in Q2.

Nguyen Van Dinh, chairman of the Vietnam Association of Real Estate Brokers (VARS), forecast that residential supply will grow by approximately 10% this year. While absorption rates may slow due to rising prices in some segments, the average rate is still expected to remain above 70%.

In the medium term, residential supply will continue to increase thanks to policy reforms that have unblocked delayed projects and allowed new project approvals, including affordable housing, he said.

Furthermore, new laws on housing, land, and real estate business as well as planned provincial mergers are expected to streamline administrative processes and reduce legal barriers for project development, he added.

Despite looming inflationary pressures, real estate prices still have room for growth. Although credit policies have eased, banks remain cautious with loans to real estate entities.

The VARS chairman emphasized that economic growth will drive real estate demand across all segments, from apartments and office space to warehouses and retail properties. Therefore, developers must prepare legally sound and market-aligned products to seize upcoming opportunities.