Việt Nam News talks with Phạm Thị Miền, deputy director of the Vietnam Association of Real Estate Brokers' Institute of Research and Evaluation, and Assoc. Prof. Trương Quang Thông, lecturer at the University of Economics HCM City, about the recent surge in housing prices, the underlying causes and possible responses to cool down the overheated market.

Phạm Thị Miền, deputy director of the Vietnam Association of Real Estate Brokers' Institute of Research and Evaluation.Assoc. Prof Trương Quang Thông, lecturer at the University of Economics HCM City.

How do you evaluate the recent increases in housing prices in Việt Nam?

Trương Quang Thông: Over the past three decades, Việt Nam has witnessed one of the strongest real estate price increases in Southeast Asia. According to the World Bank’s 2023 report, apartment prices in downtown HCM City and Hà Nội are now 20-30 times higher than the average annual income of a skilled worker – a ratio three times higher than Thailand’s and nearly four times higher than South Korea's during comparable stages of development.

The paradox is, while productivity has not kept pace with asset prices, property ownership has become both a symbol of success and a safe haven for private capital. As a result, home ownership is increasingly becoming unaffordable to urban workers. This makes the property market shift from being a foundation for housing stability and economic growth to a vehicle for wealth accumulation and speculation.

This reflects deep-seated structural policy issues. Credit, taxation and urban planning systems have seemingly all converged to preserve asset values rather than promote equitable access, making home ownership – considered a basic right – beyond the reach of a majority of residents.

Phạm Thị Miền: Since 2023, Việt Nam’s housing market has experienced a strong upward price trend, continuously setting new heights, especially in major urban areas.

In the primary market, the average selling price of commercial apartments in the third quarter of 2025 reached VNĐ78 million (US$2,900) per square metre with more than 30 per cent of new supply priced above VNĐ100 million per sq.m.

Notably, many projects have seen their prices jump by more than VNĐ1 billion per unit within just a short period of time, even though quality or surrounding infrastructure has not improved much. Some projects are priced at hundreds of millions đồng per sq.m -- a level never seen in previous cycles.

In the secondary market, prices also soared by 120-180 per cent compared with levels before October 2023, showing that the price surge has spread beyond new projects. This signals a lack of control and a market imbalance.

What are the main reasons behind the unreasonable increase in housing prices?

Thông: I think there are two main structural issues: an imbalanced credit system and the absence of effective taxation.

Although the State Bank of Vietnam (SBV) has repeatedly asked for efforts to tighten property lending since 2018, real estate-related credit – both direct and indirect – remains high, accounting for 21-25 per cent of the total outstanding loans. The real figure likely exceeds 30 per cent if consumer loans, corporate bonds, and home-mortgage collateral are included.

The problem lies in how credit is provided. Banks lend based on collateral rather than ability to generate income, meaning that buyers of second or third homes can easily borrow money from banks, while first-time home buyers struggle to access credit.

This further reinforces speculation as property values increase, borrowers can leverage more credit – and more credit pushes prices up – similar to the asset-based growth model that China experienced before 2021.

Many economies have implemented credit controls. China requires deposits of at least 60-70 per cent of payments and applies interest rates 30 per cent higher for second homes. South Korea bans mortgage loans for second homes in speculative zones, while Singapore strictly limits loan-to-value ratios to 45 per cent for second homes and 35 per cent for third homes.

In Việt Nam, there are no such regulations to differentiate between loans for accommodation needs from those for speculation. This is the root cause that channels credit into non-production assets while small- and medium-sized enterprises -- which play important roles in job creation and economic development -- thirst for capital.

Notably, taxation remains the biggest problem. Việt Nam currently has no real asset tax. Property tax in Việt Nam is among the lowest in Asia, accounting for just 0.03 per cent of GDP, while the regional average is 1.5-2 per cent, according to the World Bank’s 2023 report. Multiple homeowners do not have to pay any progressive taxes or any levy on vacant properties.

In contrast, countries like Singapore, South Korea and China have implemented strong tax-based measures. Singapore applies a progressive property taxation from zero to 36 per cent with an additional buyer’s stamp duty of 20 per cent for second homes. South Korea applies an annual tax rate of 1-6 per cent on multiple homeowners. China is piloting a 0.4-1.2 per cent property tax in major cities.

Without such taxation instruments, Việt Nam’s property market becomes a channel for idle capital. The consequence is land values rise faster than labour productivity, widening wealth inequality.

The shortcomings cause distorted capital allocation, as bank credit and household savings have largely flowed into land and property rather than production. In addition, they widen social inequality, pose significant financial stability risks, and cause erosion of social trust.

Miền: In my opinion, there are three main groups of causes behind skyrocketing housing prices -- related to supply, demand, and other macroeconomic factors.

On the supply side, while new housing supply has slightly improved, it remains insufficient to meet demand driven by rapid urbanisation and internal migration.

Project development costs have risen sharply. New regulations on land valuation under the 2024 Law on Land have caused land-use fees for numerous projects to surge. This expense accounts for a significant proportion in a project’s overall cost structure. Higher land-use fees have also reduced developers' motivation to launch new projects, especially among small- and medium-sized firms, further constraining supply.

In addition, many projects recently introduced to the market are those that had been delayed due to legal and procedural bottlenecks. Once restarted, these projects face higher financial and land clearance costs, forcing developers to increase prices.

Furthermore, most new projects are concentrated in high-end and luxury segments, while affordable and mid-range housing remains in short supply, worsening the market imbalance.

On the demand side, Việt Nam’s rapid urbanisation – with the urban population rising from 34.4 per cent in 2019 to 44.3 per cent in 2024 (about 44 million people) – and an annual migration flow of roughly one million people from rural to urban areas have created strong housing pressure in major cities.

At the same time, the deeply rooted mindset that owning a home is essential for stability and prosperity keeps demand persistently high, even during market fluctuations.

Investment behaviour also plays a role. Volatile gold and stock markets have driven many investors to real estate, considered a safer channel, intensifying speculative demand.

The period of credit loosening and expansionary monetary policy has generated a large amount of cheap capital flowing into the economy. However, as the manufacturing sector has not fully recovered and continues to face disruptions from sudden changes in trade and tariff policies, much of this capital has been directed toward real estate instead of production, pushing property prices higher.

Notably, weak oversight and limited transaction transparency have allowed short-term speculation and price manipulation, inflating prices far beyond real value.

Another underlying cause is that Việt Nam lacks a housing rental market, which could serve as an effective alternative to home ownership. As a result, most people still view owning a home as the only way to stability and prosperity. This mindset keeps demand for home purchases consistently high.

What are your recommendations for policies to stabilise the market and make housing more affordable?

Thông: To restore balance and fairness in the housing market, it is critical to differentiate credit by purpose. Preferential loans should be reserved for first homes, social housing, or urban workers, while second-home purchases should bear higher interest rates and stricter loan-to-value and debt-to-income limits.

The SBV could impose credit growth limits for specific sectors, which would allow the central bank to proactively control capital flows into high-risk areas such as real estate and securities, thereby preventing asset bubbles.

The SBV may also require banks to maintain higher capital adequacy ratio (CAR) and apply higher lending rates for excessive real estate loans, especially for second-home purchases or speculative investments.

Macroprudential tools should be used flexibly. When the market overheats, regulators can raise CAR requirement to slow down capital inflows into the sector.

Secondly, Việt Nam should introduce annual and progressive property taxation. A reasonable rate could start from 0.3-0.5 per cent of assessed market value for the first homes and 0.8-1.2 per cent for second homes. Tax on short-term transactions – for example homes resold within one or two years – could also help curb speculation and encourage long-term holding.

The policies for social and rental housing should be expanded through public-private partnerships. Public land funds should prioritise affordable rather than commercial housing projects.

Market transparency must be enhanced through disclosing actual transaction values, similar to the Korea Real Estate Board model. Reliable and open data can prevent manipulation and speculation.

In the long run, housing ownership should be considered a civil right. This will require a vision for policy making beyond short-term gains for banks or real estate developers but towards broader goals of equality and inclusive development.

Miền: To cool off the housing market, Việt Nam needs a comprehensive and coordinated set of measures addressing both supply and demand, as well as market management.

The government should accelerate legal reforms to clear project bottlenecks, simplify land access, speed up land clearance, and shorten approval and licensing processes. This would reduce compliance costs and boost housing supply.

In addition, stronger incentives for affordable housing and social housing should be introduced, including preferential access to land, tax, and credit support.

Regarding affordable housing, pilot implementation with special incentive mechanisms should be carried out. When registering to develop a project, real estate enterprises would be required to ensure that a certain proportion of their units are priced in line with local income levels.

Market opportunities should be expanded to small- and medium-sized developers through a transparent bidding process to ensure competition.

Appropriate planning and investment in infrastructure – especially public transport – are essential to encourage population and business movement away from major cities.

Việt Nam also needs to develop a professional rental housing market to change the mindset of home ownership. The focus would be completing the legal framework to protect rights of parties involved, providing incentives for rental housing projects, and offering financial supports for low-income earners, workers and young labourers. Promoting professional rental property management services and ensuring transparency in rents are also vital.

Importantly, it is pressing to establish a national real estate database and State-managed real estate and land-use rights trading centre, which will serve as the core infrastructure to standardise and enhance transparency in the property market.

These platforms would not only facilitate transactions but also provide effective tools to monitor the market, prevent speculation, price manipulation, and money laundering, thereby fostering a more transparent and healthy real estate environment.

Credit policies should be designed to direct capital flow into projects that meet real demand rather than speculative investment.

Regulating the real estate market alone is not enough. It is essential to coordinate policies with related markets such as gold and securities to facilitate a more balanced allocation of capital among these investment channels.

Support policies should also be enhanced to promote the development of the manufacturing and business sectors, which would attract capital into production and business, boost the economy, and stabilise the real estate market. VNS