High-End Supply Dominates Ho Chi Minh City’s Apartment Market: A Growing Gap in Housing Accessibility

In recent years, Ho Chi Minh City’s apartment market has become increasingly imbalanced, with most new supply focused on high-end and luxury segments. This trend has pushed prices to new heights, making it increasingly difficult for average citizens, especially young families and middle-income workers, to afford a home.

1. High-end supply dominates the market, diminishing homeownership opportunities for citizens

In early November 2024, high-end projects such as Masteri Grand View and Eaton Park launched at starting prices ranging from 100 to 140 million VND per square meter. A unit at Eaton Park starts at around 7 billion VND, with average prices between 10-12 billion VND, reaching up to nearly 20 billion VND. Meanwhile, The Opus One by Vinhomes Grand Park, a high-density residential project offering 2,000 units, has an initial price of 82 million VND per square meter, making a 53-76 square meter apartment range from 5-7 billion VND.

According to VnExpress, apartment supply in Ho Chi Minh City saw a noticeable improvement in the last two months of 2024, but 90% of the inventory is still concentrated in the high-end market, priced at over 80 million VND per square meter. Meanwhile, projects like Fiato Uptown, MT Eastmark City, and D-Homme, expected to be around 60 million VND per square meter, are likely not launching this quarter. Data from Avison Young Vietnam shows that almost 90% of apartments available in Q4 2024 are priced between $3,000-5,000 (equivalent to 60-120 million VND) per square meter, indicating a high-end product range.

2. Affordable housing is disappearing, causing severe market imbalance

As housing prices in Ho Chi Minh City continue to rise, affordable apartments have virtually vanished. According to One Housing, the average selling price for apartments in the city surpassed 80 million VND per square meter in Q3 2024, with prices in Thu Duc City nearing 100 million VND per square meter. This shift means that apartments priced below 3 billion VND, which are more affordable for the average citizen, have all but disappeared.

Savills reported that from 2016 to 2024, the proportion of apartments priced below 3 billion VND has dropped from 60% to 35%, while new units priced below 2 billion VND have practically disappeared. This is particularly challenging for middle-income earners who would need to save over 40% of their monthly income for more than 30 years to buy a home – assuming that prices don’t rise further. However, with prices continuing to climb, this scenario seems increasingly unattainable.

3. Reasons behind soaring property prices and the dominance of high-end developments

Multiple factors contribute to rising property prices in Ho Chi Minh City, but one of the primary reasons is the increasing cost of project development, particularly land prices. Trần Quang Trung, OneHousing’s Business Development Director, explained that developers are focusing on high-end and luxury apartments to optimize profits, as investment costs have soared.

Furthermore, most new projects are located in large-scale complexes or areas with pre-existing high-priced properties, making it difficult for new developments to be priced lower than previous projects in the same area. High-density projects in Thu Duc City exemplify this trend. With rising land and construction costs, new units in these areas struggle to match the prices of earlier developments, reinforcing high-end apartments as the standard for new projects.

Đinh Minh Tuấn, Business Director of Batdongsan, added that the lack of housing supply is another primary factor driving up prices. With only a limited number of new projects being approved, the market is essentially controlled by major developers who hold substantial pricing power, exacerbating the supply-demand imbalance. This situation is particularly unfavorable for people with genuine housing needs, as they find it increasingly difficult to afford a home, while high-end apartments dominate the market.

4. Forecasting trends in Ho Chi Minh City’s apartment market: Short-term improvements are unlikely

Experts at OneHousing predict that Ho Chi Minh City’s housing supply will continue to increase, reaching 12,000 units by 2025 and 16,000 units by 2026. However, most of these units are expected to remain in the high-end segment, primarily concentrated in Thu Duc City – currently one of the most expensive areas in Ho Chi Minh City.

Cao Thị Thanh Hương, Senior Research Manager at Savills, noted that unless there is policy intervention from the government and incentives to encourage affordable housing development, the supply-demand imbalance will worsen, and the demand for truly affordable housing will remain unmet. Experts suggest that solutions like expanding land quotas for affordable housing, reducing investment costs, and streamlining the project approval process are necessary to promote the growth of affordable housing and make it easier for citizens to access housing.

Conclusion

Ho Chi Minh City’s apartment market faces a daunting challenge, with high-end and luxury segments increasingly dominating supply, driving up prices, and making homeownership an elusive goal for many. Addressing this issue requires government intervention and supportive policies to foster the development of affordable housing. Otherwise, Ho Chi Minh City residents’ ability to purchase homes will continue to be suppressed, particularly as prices show no signs of slowing.

Adjusting apartment supply structures, promoting the development of affordable housing, and implementing reasonable support policies are key to resolving this issue. These measures will not only support sustainable market growth but also genuinely meet the housing needs of the city’s residents.