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The End of Real Estate’s Price Frenzy: ‘Land Banking’ No Longer a Viable Strategy

18 February, 2025

Market Stabilizes, Prices Unlikely to Drop Significantly

It has been six months since the implementation of the Land, Real Estate Business, and Housing Laws. Evaluating the impact of these laws on the real estate market, Mr. Le Van Binh, Deputy Director of the Land Department (Ministry of Natural Resources and Environment), opined that it is still too early to tell. It will take time for the laws to permeate and influence the products in the market.

At the seminar “Real Estate in 2025 – Seizing Opportunities in Challenges” held by Dan Viet newspaper on February 11, Mr. Binh remarked that real estate prices have surged drastically over the past year.

Especially from the end of 2023 to 2024, prices continued to soar. New apartments priced below VND 50 million per square meter have almost disappeared, and even older apartments that have been in operation for many years now cost more than VND 70 million per square meter. Even in old collective areas, prices have increased by 1.5–2 times, making it extremely challenging for ordinary workers to afford housing. People with VND 3–4 billion in hand still struggle to find suitable accommodation.

This situation not only creates difficulties for middle- and low-income earners in terms of home ownership but also undermines the sustainability of the market.

Analyzing this price hike, Mr. Binh attributed it not only to a shortage of supply but also to the significant influence of market psychology. For instance, news about land auctions can create a sense of urgency among buyers, leading to a fear of missing out. Even if the actual supply has not yet entered the market, the mere announcement of upcoming increases in supply can impact prices.

“As we establish a new price framework and increase supply, the market is beginning to stabilize,” he added.

Seminar “Real Estate in 2025 – Seizing Opportunities in Challenges”, held on February 11. Photo: Hong Khanh

Mr. Binh predicted that with the upcoming release of new real estate products and the implementation of relevant policies, the real estate market and prices would become more stable. This stability will enable workers to consider purchasing homes, and investors’ psychology will also calm down.

Mr. Nguyen Van Dinh, Vice President of the Vietnam Real Estate Association and President of the Vietnam Real Estate Brokers Association, shared a similar sentiment. He anticipated that real estate prices in 2025 would adjust to more reasonable levels compared to the excessive increases in 2024.

However, Mr. Dinh also noted that a significant drop in prices is unlikely due to various factors, including land prices, official price tables, and rising costs, which are creating upward pressure on the production costs of real estate products.

Both actual demand and investment demand are expected to increase in 2025. Mr. Dinh predicted an improvement in transactions next year due to better supply, more stable segments, and well-adjusted prices, leading to an overall increase in transactions. He concluded that the market would demonstrate more positive dynamics than in 2024, with supply and demand indicators improving but not returning to the levels of 2018–2019.

Is 2025 the Right Time to Invest?

Regarding investment opportunities in real estate in 2025, Mr. Nguyen Van Dinh assessed that housing prices in urban cores are currently too high. He advised people to look for new urban areas with good infrastructure and transportation connections.

Mr. Nguyen Quoc Hung, Vice President and General Secretary of the Banking Association, shared a similar perspective. He suggested that basic and affordable housing presents a good investment opportunity.

Mr. Hung pointed out that as real estate prices remain high, banks are reluctant to provide loans for investments in this sector. Therefore, investors focusing on high-end and mid-range luxury housing will find it challenging to obtain bank loans, especially if they already own multiple properties.

“In my opinion, investors in high-end and mid-range luxury real estate may encounter significant difficulties,” he stated.

He also emphasized that social housing is not intended for investment purposes and has strict regulations regarding eligible beneficiaries.

Mr. Hung highlighted industrial real estate as a promising investment opportunity, especially with the government and local authorities planning to develop these areas into high-end industrial parks with comprehensive and favorable tax policies.

When asked whether one should buy a house now, Mr. Binh suggested considering the perspective of the buyer. Typically, investors tend to purchase when prices are high. However, homebuyers would usually wait for a cooldown in the market and then make their move when prices become more affordable.

“I advise middle- and low-income earners to consider buying homes located 15–20 km away from the city center at this time,” added the Deputy Director of the Land Department.

Hong Khanh

– 15:44 02/11/2025