That is the opinion of Ms. Pham Thi Mien, Deputy Director of the Vietnam Real Estate Market Research and Evaluation Institute, in a recent interview with reporters. According to the expert, the housing market is entering a vibrant period with the return of many large-scale projects, especially in the suburban areas of Hanoi and Ho Chi Minh City. However, the “problem” of supply-demand imbalance has not been solved and the price level continues to climb.
Reporter: How do you evaluate the development of residential real estate supply in recent times?
Ms. Pham Thi Mien: The market has become vibrant again with a wave of new project launches and sales in many localities, especially in the suburbs of Hanoi and Ho Chi Minh City. However, this recovery has not been able to eliminate the “phase difference” between supply and demand that has lasted for many years. Most of the new projects are in the high-end segment, with common prices above 100 million VND/m2. In the total supply structure of newly opened apartments, the luxury, super luxury and high-end groups increased sharply compared to the previous quarter. The affordable segment is almost “absent”, accounting for only about 3% and mainly social housing.
The bright spot is that supply has tended to be more widely distributed, no longer concentrated in the central core but expanding to satellite cities – where there is abundant land fund and reasonable investment costs. However, the market is still led by large investors, in which Vingroup continues to be the enterprise contributing the largest supply in the first 9 months of the year. In addition, the entry of small and medium enterprises, especially in the Southern region, is helping the market to become more competitive and diverse.
Reporter: What do you think about the recent price level?
Ms. Pham Thi Mien: The price level continues to increase sharply in both major cities. In Hanoi, primary prices have increased steadily, pushing the whole market price to a record high. In the context that many people consider real estate as a “shelter” from inflation, the secondary market has also become vibrant. Some projects have increased from several hundred million to billions of VND in a short time, especially in well-planned urban areas.
In Ho Chi Minh City, the price increase trend is widespread, concentrated in projects with complete legal documents, convenient infrastructure connection locations and reasonable prices. Notably, investment cash flow from the Northern region, especially Hanoi, has breathed new life into the Southern market. Many projects recorded a price increase of about 5% in just one week.
Secondary transactions are somewhat busier because primary products are still at high prices and are mainly future products. However, the actual transaction volume in the secondary market is not much because the available supply is scarce, while most owners currently have no need to sell. Investors holding goods expect prices to continue to increase, while real buyers have to wait for a more suitable opportunity.
In general, house prices are unlikely to cool down in the short term. When land, material and finance costs increase, investors are forced to focus on the high-end segment to ensure profit margins. At the same time, customers with strong financial potential are still willing to pay for long-term accumulation, causing the price level to continue to stay high.
Reporter: Prices are high, so how is the current market purchasing power, madam?
Ms. Pham Thi Mien: The demand for housing remains high thanks to urbanization, economic growth and the expansion of the middle and upper classes. However, real purchasing power is under great pressure from the price level. The gap between income and housing prices is increasingly widening, making the dream of settling down for many young people increasingly distant. The market is currently strongly driven by investment capital. When monetary liquidity improves, many investors return to real estate as an effective anti-price-slip channel. They look for projects that simultaneously meet real housing needs and exploit rentals, in which the expectation of price increase is still the main factor leading to the decision to spend money.
Reporter: What do you predict about the apartment market in the coming time?
Ms. Pham Thi Mien: From now until the end of the year, the market is expected to receive additional supply from a series of large-scale projects that are completing legal procedures and preparing for sale. The apartment segment still plays a key role in the total new supply. Transactions may increase in proportion to the amount of goods coming to the market, but will be more selective. Buyers now pay great attention to the reputation of the investor, clear legal documents and the ability to connect infrastructure – utilities around the project.
The trend of shifting supply to satellite cities will continue to be clear. Areas with synchronous traffic infrastructure, accompanied by social utilities such as schools, hospitals, sports areas, shopping centers, etc. will be priority destinations. In addition, the development of belt roads, metro or inter-regional highways will contribute to increasing the value of real estate in suburban areas.
However, housing prices in Hanoi and Ho Chi Minh City are likely to continue to climb due to the scarcity of central land, while demand remains very high. Only customers with strong financial potential can access high-end supply, while the affordable housing segment still needs more support policies and appropriate development mechanisms.
Reporter: Thank you for this conversation!
