Old apartments in Ho Chi Minh City are in the midst of a

According to data from VnExpress and Batdongsan, prices have increased by an average of 10-20% compared to the beginning of the year, with some high-end projects such as The Panorama, Empire Thủ Thiêm, and Vinhome Central Park recording increases ranging from 12-26%. Mid-range projects are no exception, with Scenic Valley, Eco Green Sài Gòn, and Saigon South Residences seeing price hikes between 11-18%.

The main reasons for this price surge, as pointed out by the Ministry of Construction, are:

1. Limited supply driving prices up: The lack of new project developments, especially in the mid-range and affordable segments, has led to a shortage of supply. This has not only affected primary market prices but has also pushed secondary market prices higher. Buyers, with limited options, are turning to the secondary market, increasing demand and further driving up prices.

2. Rising input costs: Land prices have risen, along with construction material costs, labor costs, and extended legal approval processes, making it impossible for developers to lower prices. Instead, they are forced to raise prices to cover these costs. This creates a vicious cycle, as developers, even if they wanted to, struggle to reduce prices to remain competitive.

3. Pressure from the primary market: New projects, despite being far from the city center, have high selling prices, putting pressure on the secondary market. Buyers tend to return to completed projects with title deeds because they are cheaper and immediately usable, further driving up prices of older projects.

4. Buyer psychology and legal changes: Changes in new legal regulations on land, construction, and housing have improved buyer sentiment, making them more willing to spend on purchasing apartments. They expect that with the new regulations, projects will be legalized faster and loan access will become easier, thus increasing demand for home ownership.

5. Future outlook: In the 2024-2026 period, even though legal issues might be resolved, the shortage of clean land will limit the development of new projects. This means that supply will still not be able to meet demand, especially in the mid-range and affordable segments, and apartment prices are likely to continue their upward trend.

6. Shift towards the high-end segment: Due to the shortage of mid-range and affordable apartments, developers are shifting towards developing high-end projects to maximize profits from the limited land. This creates an imbalance in the housing product segment, where people looking for homes at more moderate prices face limited options.

7. Impact of the new financial cycle: With the implementation of the new financial cycle, credit policies may be eased, allowing people to access loans more easily. However, if interest rates rise or credit conditions tighten again, this could reduce purchasing power. But for now, the shortage of supply remains the main factor driving prices.

Another noteworthy point is that the primary market, with new projects having high selling prices, even those located far from the city center, has created upward pressure on the prices of existing projects. For example, a project located nearly 30 km from District 1 is priced similarly to high-end projects in the central area.

Experts predict that while new laws might help remove legal barriers and support market growth, during the 2024-2026 period, the scarcity of clean land and the focus on high-end supply will make it difficult for the market to experience a significant boom. This suggests that housing prices may continue to rise unless the supply issue is addressed soon.