Vietnam Housing Prices Soar Vertically

Due to the Real Estate Development Speed Not Keeping Up with Demand

[Asia Economy Hanoi Joara Guest Reporter] The Vietnamese real estate market is booming despite the novel coronavirus infection (COVID-19). Although the number of transactions has decreased, prices have risen significantly.

According to a report from the Vietnamese Ministry of Construction on the 23rd, the number of real estate transactions in the first quarter, when COVID-19 began to spread, was 13,042, marking the lowest in four years. This is only about 40% compared to the previous quarter.

On the other hand, the upward trend in housing prices is remarkable. Apartment prices in Hanoi increased by 1.02% compared to a year ago, while Ho Chi Minh City saw a rise of 3.5%. The price increase rate for luxury apartments reached 2.75%. The average price per square meter was USD 2,900, the highest in the past 10 years. The average apartment prices in Ho Chi Minh City and Hanoi recorded 2 billion VND (approximately 100 million KRW), which is 28 times the average annual salary of new graduates last year.

The biggest reason behind the rise in real estate prices is sluggish real estate development. Nguyen Tejip, CEO of the real estate investment company Tinpot Investment, said, "As urbanization rapidly progresses, housing demand is growing, but real estate projects in major cities like Hanoi and Ho Chi Minh are delayed due to administrative processing." Large-scale development projects being postponed are causing the price increases.

Suong Ngoc Khung, Senior Director of the real estate service company Savills, also said, "License issuance is being delayed," adding, "The longer the approval is delayed, the higher the input costs for companies, which eventually pass on to homebuyers."

The authorities plan to increase the supply of affordable housing by providing financial incentives to developers. The Ministry of Construction announced that it is preparing legislation to reduce land use fees by 50% and allow bank loans at low interest rates to increase housing supply. The government expects that by reducing land use fees and easing administrative procedures, real estate construction companies will be able to lower prices to 20 million VND (860 USD) per square meter. Deputy Director of the Housing and Real Estate Market Management Department, Bubanfan, said, "We expect this policy to help balance the housing market."

This content was produced with the assistance of AI translation services.