Southern Real Estate: Low Consumption Rate but Prices Still Rise

Currently, the real estate market in the South is experiencing a situation where a large amount of inventory across various segments is being offered for sale, the consumption rate is low, but prices are still rising.

Contradictory Developments

According to a report by DKRA Group, in the apartment segment in Ho Chi Minh City and its surrounding areas, in the first quarter of 2025, there were 113 projects with 12,892 apartments launched on the market, but only 2,586 units were sold successfully. Previously, in 2024, there were 23,459 apartments opened for sale in the southern region, but only 12,506 units successfully transacted.

The average price of apartments increased by 5 - 11% compared to the end of 2024. In Binh Duong, the new price for this segment is around 28 - 60 million VND/m2, while in Ba Ria - Vung Tau it is about 35 - 61 million VND/m2… Notably, in Ho Chi Minh City, the lowest price is around 37 million VND/m2, but the highest can reach up to 493 million VND/m2.

In the land lot segment, in the first quarter, there were 102 projects with 6,536 products launched, but only 430 products were sold, indicating a mere 6.6% successful consumption rate. Land lot prices increased by 2 - 6% compared to the end of 2024.

For the townhouses and villas segment, the market had 86 projects with 5,096 units launched in the first quarter, but only 373 units were sold.

It is worth noting that many new projects, despite lacking legal qualifications, are still being opened and introduced to the market. The number of these products is not included in the sales figures for the first quarter in DKRA's report.

In Long An, there are currently about 6,000 townhouses and villas from various projects that have not met the conditions for sale, with announced prices ranging from 5 to 20 billion VND/unit. In Binh Duong, there are about 10 projects that do not have the legal qualifications for sale but are still ongoing with sales activities.

Recently, the People's Committee of Ho Chi Minh City announced that in 2025, it will resolve 100% of the projects currently facing legal issues within the city's jurisdiction (more than 540 projects). If these projects are able to clear legal obstacles soon, they could be launched by the end of 2025 and into 2026, significantly increasing supply for the market.

Fierce Competition

According to real estate experts, in the first quarter, the number of products launched in the southern market has become excessively high, while the consumption rate is low. Moreover, the amount of unsold inventory from 2024 remains significantly high, coupled with an additional approximately 10,000 products expected to be announced for sale in the second quarter, which will intensify competition in the market even further.

Mr. Vo Hong Thang, Deputy General Director in charge of DKRA Consulting and Investment Director of DKRA Group, pointed out that the market primarily consists of projects in the mid-range and high-end segments; conversely, the affordable housing segment, particularly Class C apartments catering to the real housing needs of the majority, continues to face supply shortages.

Addressing the supply-demand issue, Mr. Vo Son, General Director of SK Land Joint Stock Company, emphasized that with the current new real estate products launched, poor control could lead to a "reverse bubble" due to "over-saturation" of supply. For example, in Long An, while the average income of the population is not high, there are only 2 apartment projects in the entire market, yet there are dozens of townhouse, villa, and land lot projects priced between 25 - 100 million VND/m2.

“Where will customers come from to purchase tens of thousands of these townhouses and villas for living? Meanwhile, the costs of developing a project are substantial; companies primarily rely on bank loans and bond issuances. When products cannot be sold, businesses will face numerous difficulties,” Mr. Son analyzed.

This businessman cited the Ho Tram market (Ba Ria - Vung Tau), which currently has dozens of projects that are deserted and unfinished. “Similarly, in the C4 area - Bien Hoa City (Dong Nai), there are tens of thousands of townhouses and villas being marketed by multiple investors with few buyers, and now these townhouses and villas have fallen into a state of neglect,” Mr. Son stated.

According to Mr. Son, the lack of control over real estate prices is also a cause for concern that could create a "reverse bubble." Currently, most new projects for sale are priced high; consequently, the prices of older projects that have been opened and delivered are pushed up to align with those of new projects, resulting in a price level far beyond the reach of the majority of people with real housing needs.

Additionally, the issue of granting permits for new projects is also worth discussing. According to market observers, there is currently a situation in various provinces and cities where project permits are granted in bulk without phasing. For instance, in Long An, within the first quarter, three large projects spanning over 600 hectares were approved, primarily consisting of townhouses and villas, while the housing needs of the people still focus on affordable housing such as social housing and low-cost commercial apartments.