Why Vietnam home prices rise non-stop?

WHY VIETNAM'S HOME PRICES CONTINUE TO RISE UNCHECKED

RECORD BREAKING PRICE SURGES IN MAJOR CITIES
Housing prices in Vietnam have been climbing relentlessly in recent years, driven by escalating development costs and shrinking supply, according to industry analysts. In 2025, residential property prices in Hanoi and Ho Chi Minh City (HCMC) have hit unprecedented highs.

In Hanoi, the average price of an apartment now stands at VND 80 million (approximately USD 3,030) per square meter, marking a 33% increase from the previous year. Meanwhile, single family homes and townhouses range between VND 100 million and VND 200 million per square meter. HCMC has seen even sharper rises, with apartment prices surging by 36% to VND 89 million per square meter, while single family homes and townhouses now cost between VND 230 million and VND 300 million.

KEY DRIVERS BEHIND SOARING PROPERTY PRICES

RISING DEVELOPMENT COSTS AND LAND PRICES
Economist Can Van Luc identifies soaring land costs as a primary factor behind the price hikes. He notes that increased expenses for building materials, labor, and bank loans further inflate project development costs, placing upward pressure on property prices.

Pham Viet Thuan, Director of the Institute for Resource and Environmental Economics in HCMC, points to developers' profit motives as another major contributor. "When developers set excessively high profit expectations and concentrate on premium market segments, overall price levels continue to be pushed upward," Thuan explains.

REGULATORY DELAYS AND SUPPLY CONSTRAINTS
Ngo Quang Phuc, CEO of southern property developer Phu Dong Group, attributes high housing prices to multiple cost layers, with land expenses being the most significant. He highlights that developers often face prolonged delays in obtaining necessary licenses and permits, some taking up to a decade to secure full approvals. These delays not only increase costs but also restrict the supply of new housing units.

Can Van Luc emphasizes that many projects remain stalled not due to funding shortages but because of lengthy approval processes. "If administrative procedures were streamlined, thousands of projects could enter the market quickly, boosting supply and helping to stabilize prices," he suggests.

POTENTIAL SOLUTIONS TO CURB PRICE GROWTH

LEGAL AND ADMINISTRATIVE REFORMS
Authorities have proposed several measures to address the issue, including legal and land administration reforms, credit incentives, and the implementation of a comprehensive national housing strategy. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, stresses the importance of reducing land costs, which currently account for 10% of apartment prices and 30% of townhouse prices.

Chau urges developers to adopt more reasonable profit margins instead of pursuing excessive returns. He also suggests introducing taxes on vacant properties and second homes to discourage speculation and enforce better supply control through planning policies.

FOCUS ON AFFORDABLE AND SOCIAL HOUSING
Economist Dinh Trong Thinh advocates for a renewed emphasis on affordable and social housing—a segment that has been largely neglected in recent years. He recommends allocating public or low cost land specifically for affordable housing projects. "While it is challenging to reduce construction costs, the government can utilize these land reserves to develop reasonably priced housing," Thinh states.

He also calls for a clear housing finance strategy, featuring favorable credit terms, lower interest rates, and accessible loan conditions to improve homebuyer affordability. Additionally, Thinh underscores the need to accelerate delayed projects to enhance housing supply and alleviate price pressures.