Broker Association: The New Housing Supply Mainly Serves the Wealthy

In the first quarter market report, the Vietnam Real Estate Brokerage Association (VARS) stated that the supply structure of housing remains in a state of serious imbalance.

The entire market has approximately 14,500 new products for sale, which is a reduction of half compared to the end of last year. Among these, 58% of the share belongs to the high-end and luxury segments, an increase of 11% year-on-year. The primary supply comes from large urban areas in the outskirts of Hanoi, Ho Chi Minh City, and neighboring provinces.

The proportion of the affordable segment (including social housing), although improved, accounts for nearly 13% with almost 2,000 products, but it remains "very limited compared to the demand, estimated at millions of products."

In Hanoi, the primary selling price of apartments reached an average of 70.2 million VND per square meter, a slight increase compared to the end of last year but up over 77% compared to Q1 2019. The price increase primarily stems from an increasingly expensive new product lineup. Meanwhile, some projects have seen stable transfer prices after a period of rapid price escalation.

In Ho Chi Minh City, the average apartment price is around 71.8 million VND per square meter, up 35% over the past five years. Similarly, this segment in Da Nang has also increased by 58% compared to early 2019, averaging 62 million VND per square meter. In the period from 2019 to 2025, VARS estimates that the price increase for apartments in Da Nang will be 1.6 times higher than that of Ho Chi Minh City.

"The supply of new projects primarily serves individuals with high financial capacity and investors, posing risks to the sustainable development of the market," the Brokerage Association noted.

Real estate in central Hanoi, October 2024. Picture: Giang Huy

The developments have also been noted by the research unit Cushman & Wakefield. The firm reported that the high-end and luxury segments account for more than 77% of the new apartment supply in Hanoi, while the affordable apartment segment is very limited. The average primary price in Q1 reached 3,221 USD (over 83 million VND) per square meter, increasing by 10% quarter-on-quarter. However, they noted a decline in demand for the apartment segment. The market had over 4,300 apartments sold, a decrease of 53% quarter-on-quarter.

In Ho Chi Minh City, according to Phuc Thanh An (PTA), the mid-range housing segment is increasingly scarce, making it very difficult for those looking to buy a home to find "affordable" options. Among the apartments launched in Q1 and soon to be launched in Q2, those priced around 40-60 million VND per square meter comprise less than 15% of the supply.

The Brokerage Association recognizes that housing prices continue to rise sharply, outpacing income growth, forcing many young people to opt for renting instead of buying a home. To purchase an apartment in a major urban area, buyers need a minimum monthly income ranging from 45 million VND to 210 million VND, depending on the area.

In the context of two-bedroom apartments under 3 billion VND gradually disappearing, even when accumulating 30% of the apartment's value, obtaining a mortgage remains very difficult for them. The reason is the unpredictability of floating interest rates, along with debt repayment terms extending from 15 to 25 years, which creates significant financial pressure and impacts quality of life.

In the long term, experts predict that the trend of renting rather than buying will continue to spread. VARS recommends that real estate companies promote the "build to rent" model. Legal policies need to have mechanisms to protect tenants' rights and limit the annual rental price increases to encourage long-term rental contracts. Financial institutions should also consider developing credit packages for the "rent to own" model, providing tenants with the opportunity to own a home after a period of renting.