Vietnam’s realty market may soon shift from undersupply to oversupply: experts

The real estate market in Vietnam will soon face oversupply, a reversal of the supply shortage seen in recent years, according to economist Dr. Le Xuan Nghia.

Speaking at a forum entitled “Investing in Real Estate in a New Era: New Thinking – New Opportunities” in Hanoi on Thursday, Nghia said efforts to solve the oversupply issue in 2016 inadvertently created a paradox: a shortage of new projects which drove property prices up in recent years.

The market’s prospects are largely driven by the government’s strategic policy of provincial mergers - a move expected to spark a massive wave of urbanization across the country, forming vibrant “twin cities” and generating a new growth momentum for the real estate market, he noted.

Additionally, a series of national infrastructure projects - including high-speed railways, expressways, seaports, and more - will ignite an unprecedented urbanization trend, not only in major cities but also in many localities nationwide, he added.

"I hope this development will gradually bring real estate prices back to their true value, after the disruptions caused by previous supply shortages," said Nghia, former vice chairman of the National Financial Supervisory Commission and former director of the central bank's banking development strategy department.

Sharing the same view, Nguyen Trung Vu, chairman of real estate developer Cen Group, said that the real estate market has recently faced numerous obstacles, particularly supply limitations.

However, the upcoming landscape will be different, he noted, believing the market will likely “explode” not in terms of prices, but in terms of new supply, giving young people more opportunities to buy homes.

We are entering a phase of excess supply, where real estate products will increase dramatically. In the past, real estate projects covering 1,000-2,000 hectares were considered huge and rare. But now, mega-urban projects may reach 1,700-4,000 hectares, even up to 10,000 hectares - something we've never seen before. The next phase of the game will be completely different," Vu remarked.

According to Associate Prof Dr. Tran Dinh Thien, the real estate market is facing a potential boom as Vietnam strives for double-digit economic growth next year - a rate never seen in the four decades since the country began its economic reforms.

"In the past 40 years of reform, Vietnam has never achieved double-digit growth. The average has been about 6.5%, and even then, the real estate market has grown significantly. If we do reach double-digit growth (nearly double), the potential of the property market will be enormous. It could be explosive,” he remarked.

Thien is former head of Hanoi-based Vietnam Institute of Economics and a former member of the Prime Minister's economic think tank.

However, he warned that the risk of collapse is very high, as rapid growth often comes with poor management and an inability to respond swiftly to changes, leading to irregular and abnormal development.

Thien highlighted that in the first half of 2025, the number of newly established businesses reached 111,800, a year-on-year increase of 11.3%, while the number of enterprises exiting the market was 111,600, up 14.4%.

The number of business closures is getting closer to the number of new openings, reflecting a stagnant business environment and rising risks. As the number of businesses shrinks, their scale becomes smaller, and employment drops, which directly affects incomes, both for businesses and workers, ultimately impacting the real estate market and others in the near future.

Additionally, attention must be given to how the expansion of social housing may affect the commercial housing market. The competition in the property sector in the near future is expected to be fierce, he noted.

Commenting on future real estate market trends, Dr. Nghia noted that in the context of market transformation, particularly with the role of Resolution 68 on private sector development, there will be vast space for business growth.

“Imagine businesses currently moving through narrow alleys where bicycles and cars go at the same speed. But when regulatory barriers are removed, like entering a grand avenue, there will be a huge difference between businesses of different sizes.

"Large enterprises with complete ecosystems will move quickly, capable of building modern, synchronized urban areas with full amenities, thereby shaping the market. Smaller ones will need to seek collaboration opportunities and share ‘slices of the pie’ that match their capabilities,” he explained.