The dynamics of real estate prices in Vietnam directly depends on the economic situation in the country. Significant factors shaping the value of housing are construction costs, per capita income, rental costs, and lending rates. The cost of homes in Vietnam may also vary depending on the location and other aspects, such as the type of real estate, the year the building was constructed, and how comfortable and prestigious the residential complex is. Let’s take a look at the current situation on the local market, outlook, and forecast for property prices for 5 years.
Content:
- Characteristics of the Vietnamese real estate market
- Post-crisis dynamics of property prices in Vietnam
- Legislation updates
- Housing prices in Vietnam
- Development outlook for the Vietnamese real estate market
- Buy real estate in Vietnam with us!
Characteristics of the Vietnamese real estate market
The country’s economy as a whole remains fast developing. Over 2022, it grew by 8%. In Q2 2023, the country’s real GDP growth was 4.14% compared to the previous year. However, the property market can hardly be called stable.
In Q1 2023, sales in the country’s 2 largest cities, Hanoi and Ho Chi Minh City, decreased. In the capital, 58% fewer apartments and 78% fewer houses were sold compared to the same period in 2022. In Ho Chi Minh City, these figures were 71% and 80% respectively. This situation is due to a shortage of supply and rising mortgage rates. Housing construction activity remains low. However, the cost of real estate in Vietnam is now continuing to rise. Analysts note that this is most prominent in Hanoi and Ho Chi Minh City.
Post-crisis dynamics of property prices in Vietnam
The country weathered the pandemic period relatively easily. Changes in real estate values in Vietnam were negligible. With the opening of borders, demand began to grow, and along with it, the cost also increased. For example, in Hanoi, the average price of apartments has increased by 16.08% over the past year. In Ho Chi Minh City, apartment prices in Q1 2023 increased by 10.32% compared to the previous year and reached an average of $3,229 per 1 m².
Main factors driving price dynamics and demand for housing
The basic criteria that contribute to price changes and growth or decline in demand for property in Vietnam include:
- Urbanisation and employment rate. With a higher employment rate, there are generally more people earning a stable income and able to afford to purchase or rent property. In large cities and resort locations, housing is in constant demand among not only local buyers but also overseas investors.
- Mortgage interest rates. Lower rates encourage more demand for homes and lead to more transactions, while higher rates reduce demand and contribute to rising prices. However, this applies more to standard housing. Premium properties are typically purchased by wealthy buyers using their own funds to pay.
- Demography. Age, income, and family size also influence the demand for different types of property. Retirees, for instance, may prefer small detached homes or condominiums. Families with children value a sufficient amount of free space, so they choose spacious houses.
- Housing supply and demand. The shortage of listings leads to an increase in the cost of properties.
Legislation updates
Until 2014, foreigners wishing to buy real estate faced tight restrictions. With the liberalisation of legislation, they have more options but must take into account certain nuances. The following rules apply to overseas buyers:
- There is no limit to the number of properties that expats can own. However, if it is an apartment, then they can only own 30% of the units within one condominium. When buying a villa in Vietnam, foreigners can own no more than 250 properties within a specific administrative location.
- The initial ownership period is 50 years. It may be extended in the future.
- Construction land plots are owned by the state. Land can only be leased.
Such factors may seem unusual to Europeans but are widespread in Southeast Asian countries. In practice, they do not limit the rights of disposal and use, since foreigners can own property, sell it, and rent it out.
Housing prices in Vietnam
The pricing policy is influenced by several factors:
- Property type;
- Living space area and number of bedrooms;
- Location, proximity to the sea or well-developed infrastructure of large cities;
- Additional amenities in the residential complex.
The price range is quite wide. At the time of writing this article, among the listings, you can find an off-plan condominium apartment for $11,000. Meanwhile, a completed penthouse is costs $1 million. The average home price is $500,000.
On our website, you can familiarise yourself with the latest analytical data and find out the cost of real estate in Vietnam in dollars and euros.
Development outlook for the Vietnamese real estate market
Market prospects depend on further economic policy and changes in legislation. A tightening of the lending criteria will significantly affect both demand and supply. For smaller developers, difficulties accessing capital can lead to project delays and reduced construction scales, so it is better to give priority to large developers with their own assets.
Despite the liberalisation of legislation, legal regulations on land and housing are still perceived by foreign buyers as quite complex and confusing. To address this issue and ensure the interest of overseas buyers, the government is now in the process of introducing amendments, which will be adopted by the end of 2023. If this happens, the number of buyers from abroad will increase, which in turn will affect how much real estate in Vietnam costs. It is important to note that, despite the current situation, the cost of housing in the country is not dropping but only growing. For example, in Ho Chi Minh City, apartments went up in price by 75% between 2017 and 2019. Therefore, one cannot expect a drop in prices in the future either.
Buy real estate in Vietnam with us!
The website offers listings from developers and local agencies. The database is regularly updated and contains only current information. Using filters in the search system, you can find the type of real estate that matches your preferences and budget. Cost calculations are available in different currencies. For the convenience of buyers, you can set property prices in dollars and euros. Specialists are always available and ready to advise on the selection and purchase of overseas real estate. Explore the current listings for houses and apartments in Vietnam right now!