Resurgence and Challenges in Vietnam’s Real Estate Market
An Overview of Market Trends
The Vietnamese real estate market is undergoing notable changes, particularly in its pricing dynamics and supply trends. Recent data reveals a stark disappearance of affordable apartments, with those priced under VND 40 million ($1,530) per square meter vanishing entirely in major cities. Now, even properties below VND 60 million ($2,295) are becoming increasingly rare, raising concerns about housing accessibility for the average citizen.
A Positive Shift in Housing Supply
Despite these challenges, Q2 of 2025 showed signs of a revitalized market. A significant uptick in housing supply, accompanied by a substantial increase in transactions, signals a possible shift in the market’s trajectory. Demand remains robust, particularly in bustling urban centers like Hanoi, Ho Chi Minh City, and Danang, where real estate continues to captivate both buyers and investors.
In the first half of this year, the return of real estate businesses was palpable, with a remarkable 76% increase year-on-year. Newly established companies rose by 15%, while total registered capital saw a 20% boost. This resurgence indicates an accelerating recovery, with an average of around 430 new property firms launching each month.
Burgeoning Supply
The Vietnam Association of Real Estate Brokers (VARS) reports that over 36,000 new housing units entered the market in Q2 alone—a staggering increase of 90% year-on-year. In total, about 64,000 housing units were supplied in the first half of 2025, representing around 80% of the entire supply from 2024. It’s noteworthy that more than 51,000 of these were new products, suggesting a fresh wave of construction and development.
Pricing Dynamics
While the supply of housing increases, a substantial structural imbalance persists. Major developers dominate the market, particularly in southern regions, but the focus remains primarily on high-end and luxury apartments. The supply of affordable housing has not kept pace with soaring demand, leading to limited options for first-time homebuyers.
For instance, Hanoi saw an average selling price for apartments rise to VND 75.5 million ($2,888) per square meter, a 7.7% increase from the previous quarter. This significant price point reflects developers’ strategies of offloading inventory at higher prices. Similarly, in Ho Chi Minh City, average prices reached VND 77.1 million ($2,949) per square meter, while Danang’s rates climbed to VND 66.4 million ($2,540) per square meter.
Market Performance Metrics
The absorption rate—a critical metric in real estate—indicates a healthy trajectory, with approximately 27,000 successful transactions in Q2 and an overall market absorption rate of 54%. New product absorption mirrored this, measuring 61% with over 22,000 transactions. Apartments accounted for over 56% of total transactions, while low-rise housing struggled to keep up, likely due to their elevated prices.
Investor Sentiment and Future Projections
According to experts, housing prices are expected to rise in the short term, fueled by high investor expectations and strong public investment, amid improving infrastructure. However, the market must contend with various challenges ahead. Young and middle-income earners are increasingly squeezed out of the market, limiting real demand and potentially impacting the broader economy.
Concerns about a Potential Asset Bubble
Industry analysts highlight the risk of forming a new asset bubble, exacerbated by rising property costs and a mismatch in supply and demand. Affordable housing remains elusive, and persistent issues related to land use fees and financing costs pose additional obstacles for developers. Nguyen Hoang of Eagle Academy stresses that although the market has shown strong recovery signs, it continues to lack the diversity seen in earlier years.
Legal and Structural Hurdles
Looking ahead, the government aims for an ambitious GDP growth rate of 8% for 2025, following a successful first half that recorded growth at 7.52%. Yet, factors like exchange rates, inflation, and interest rates loom large over the real estate sector, raising questions about sustainability.
Legal bottlenecks in many projects hinder the release of new supply, presenting a critical challenge for local governments as they work to stimulate the market. The upcoming application of new land pricing regulations, starting January 1, 2026, is also expected to create ripples throughout the real estate landscape.
Market Stability on the Horizon
As Vietnam’s real estate market navigates this complex terrain, observers remain cautiously optimistic. While the potential for explosive growth appears limited, the market is not likely to decline either. Instead, it may stabilize, with purchasing power expected to hover around the same levels as seen in the first half of the year, maintaining absorption rates between 50-60%.
The unfolding narrative of Vietnam’s real estate market encapsulates a blend of optimism and caution, as the nation grapples with the balance between growth and accessibility.