Analysts Report Varied Outlook for Vietnam’s Real Estate Market in Q2

Vietnam’s real estate market is poised for notable developments in the second quarter of 2025. Analysts suggest that while developers are ramping up the launch of new projects, the overarching climate is complicated by uncertainties stemming from U.S. trade policies. This backdrop may play a pivotal role in shaping market sentiment and influencing consumer confidence, raising some concerns about volatility in the near future.

However, a key consideration for potential investors is the impact of high offering prices on market liquidity. According to experts from Cushman & Wakefield, these elevated entry costs could pose challenges for buyers and dampen overall market activity.

Apartment Market: A Bright Spot Amid Price Surge

The first quarter of 2025 has closed on a more optimistic note compared to the previous year, particularly within the apartment segment. Despite a considerable surge in primary prices, this area of the market continues to attract attention. However, challenges remain, especially concerning liquidity—highlighting a mismatch between supply and demand that persists due to a limited number of new project launches.

According to Cushman & Wakefield’s Q1 market summary, Ho Chi Minh City saw the introduction of approximately 2,392 new units—representing a 12% decline from the previous quarter. What’s evident is that the supply remains heavily concentrated in the premium and luxury segments, raising questions about accessibility for the average buyer.

Geographic distribution of new supply illustrates a fascinating trend. In Ho Chi Minh City, 15% of new properties emerged from the West, 19% from the South, 27% from the East, and 26% from central districts—providing insight into where development efforts are focused. However, the average primary price has soared to a record-setting $4,691 per square meter—a staggering increase of nearly 28% from late 2024, and an eye-watering 47% year-on-year.

A separate analysis from DKRA Group revealed that Ho Chi Minh City had 113 apartment projects translating to a total of 12,892 units in Q1. The sales volume experienced healthy activity, with 2,586 units transacted—a remarkable 56% year-on-year increase. It’s worth noting that while neighboring Binh Duong province accounted for a significant portion of supply, the main focus remained firmly on Ho Chi Minh City.

Luxury apartments have dominated the market landscape, constituting a staggering 72.1% of primary supply in Ho Chi Minh City. Conversely, mid-end (grade B) and affordable (grade C) apartments were predominantly found in adjacent provinces, presenting buyers with varying options based on their budgetary constraints.

The upward trajectory in primary prices has been consistent, with increases of 2-5% observed across numerous projects. In fact, some developments have even witnessed price hikes of as much as 10%. The most significant figures for primary apartment prices in Ho Chi Minh City saw a peak of VND493 million ($18,960) per square meter on the higher end, with the lowest plunging to VND37 million ($1,423).

As for other provinces, the data is equally telling. In Binh Duong, prices ranged from VND60 million to VND28 million per square meter. In Ba Ria-Vung Tau, values fluctuated between VND61 million and VND35 million; Dong Nai boasted prices of VND41 million to VND33 million, while Long An prices hovered around VND31 million and VND21 million.

Despite these promising sales figures, various economic factors—such as the escalating costs of construction materials, labor, and interest rates—continue to exert pressure on prices, resisting any possibility of decline. Observations by Trang Bui, country head of Cushman & Wakefield Vietnam, suggest that the ongoing price hikes are largely driven by the predominance of high-end and luxury projects, which tend to exceed VND100 million ($3,845) per square meter.

Nevertheless, the surge in prices has translated into a concerning decline in market liquidity. The transaction volume dropped to just 1,101 apartment units in Q1, reflecting a staggering 58% decrease from the previous quarter. Even initiatives such as extended payment plans and discounts did not entice buyers, as the market continues to push prices out of reach for many.

Looking ahead, Bui cautions that a continued price escalation could precipitate a liquidity crisis in Ho Chi Minh City’s apartment market, prompting buyers to redirect their attention toward more suburban and affordable options in neighboring provinces.

Anticipated Trends for Q2 and Beyond

As we approach Q2, expectations are that new housing supply in Ho Chi Minh City and its surrounding areas will rebound, potentially reaching 3,000 to 4,000 units. This is framed within a broader context where Ho Chi Minh City and Binh Duong are projected to retain their leadership in apartment supply, while land plots and villa/townhouse projects will likely dominate in nearby provinces.

The focus on luxury apartments remains strong within Ho Chi Minh City; however, the market continues to experience a significant shortage of affordable housing (grade C) that addresses the actual demand for homeownership.

As demand appears to be on a gradual recovery path, apartments are expected to remain the main drivers of this momentum. Despite looming inflationary concerns, primary prices may continue to experience upward pressure, attributed to the high costs of inputs. In fact, many property developers are currently gearing up to launch new projects within the second quarter.

According to Nguyen Van Dinh, chairman of the Vietnam Association of Real Estate Brokers (VARS), the overall residential supply is projected to grow by around 10% throughout 2025. Although some segments may face slower absorption rates due to rising costs, the average absorption rate is still expected to hover above 70%—indicating a resilient market outlook.

Looking toward the medium term, continued increases in residential supply are anticipated, fueled by policy reforms aimed at reviving previously stalled projects and facilitating new approvals, especially for affordable housing. Dinh also noted that upcoming legislative changes concerning housing, land, and real estate business practices are poised to ease administrative burdens and reduce legal complexities in project development.

While inflationary pressures loom large, it’s worth noting that the real estate prices still exhibit potential for growth. Credit policies have been relaxed, yet banks remain cautious in extending loans to real estate firms, underlining the complexities within the market landscape.

Dinh emphasizes that economic growth will undoubtedly drive demand across all property sectors—whether it’s apartments, office spaces, or retail properties. As the market evolves, developers are encouraged to create legally sound, market-aligned proposals to capitalize on the opportunities that lie ahead.