Real Estate Market Situation in Ho Chi Minh City: Imbalanced Housing Product Structure and Price Increase Forecast

In the past 11 months, Ho Chi Minh City's real estate market has undergone significant changes, particularly in terms of supply and prices. For the first time, the high-end housing market has dominated, driving prices to unprecedented levels. This signals an imbalance in the housing product structure, while also indicating that the real estate market lacks sustainability and fails to meet the real needs of the people.

Supply Shortage and Dominance of the High-End Market

In the past 11 months, Ho Chi Minh City only had 4 housing projects eligible for sale, totaling 1,611 units, all of which are in the high-end market, with an average price of VND 9.39 billion per unit. This marks the first time the high-end housing market has completely dominated the supply in the city's real estate market. Meanwhile, mid-range and affordable housing are almost nonexistent, leading to a severe imbalance between supply and demand.

Compared to the same period last year, the number of housing units eligible for sale has decreased by 90%. The lack of affordable mid-range and low-cost housing has made it difficult to meet the real housing needs, making the market more unstable. Although there are currently 31 ongoing housing projects with a total of 31,167 units under construction, most of these are in the high-end market, leaving people with actual housing needs unable to access them.

Current Market Situation and Price Increase Forecast

According to Mr. Lê Hoàng Châu, President of the Ho Chi Minh City Real Estate Association (HoREA), only 12 projects were approved for investment this year, which is too few, representing only one-fifth of the number of projects approved before the COVID-19 pandemic. This suggests that the lack of new housing projects could lead to a supply shortage, driving up prices.

Additionally, no housing projects have been allocated land or leased this year, and only two commercial housing projects have been granted construction permits, further tightening the supply.

Main Causes of the Price Increase

President Lê Hoàng Châu believes that the main reason for the continuous increase in house prices is the limited supply of commercial housing projects, which results in a shortage of housing products. When there is a lack of new projects, competition between developers leads to price increases. From 2015 to 2023, apartment prices increased by 15%-20%. It is expected that by 2025, with land price adjustments, housing prices will increase by 15%-20% compared to this year.

Imbalanced Housing Product Structure

Currently, the housing product structure in Ho Chi Minh City's real estate market is significantly imbalanced. According to reports, high-end housing accounted for 70% of the market share in 2020, and this ratio was even higher in 2022-2023, reaching 72%, 78.3%, and 68.55%, respectively. Meanwhile, there is almost no new supply of mid-range and affordable housing, leading to a lack of fairness in the market and failing to meet the housing needs of the majority of middle- and low-income citizens.

Conclusion

Currently, the real estate market in Ho Chi Minh City suffers from a serious imbalance in housing product structure, with the high-end housing market dominating, causing prices to soar and failing to meet actual demand. To restore sustainable development, the city needs to take strong measures to adjust the product structure, promote the approval and construction of mid-range and affordable housing projects to meet the needs of the majority of citizens, and reduce market price fluctuations.