“Housing Prices Soar”
According to the Ministry of Construction, the real estate market has been flourishing in the first few months of 2025, with an increase in property supply and transactions compared to the same period last year. However, the supply remains limited and fails to meet the market demand, with an imbalance in product structure. There is a shortage of affordable housing for workers and young people, while there is an excess of villas and low-rise houses. Real estate prices are also unaffordable for many potential buyers. Speculation, manipulation, and price gouging continue to distort the market.
In Hanoi, housing prices have skyrocketed since the second half of 2024, with commercial apartments priced below VND 50 million per square meter almost disappearing, even in areas outside the Ring Road 3.
In Ho Chi Minh City, most projects launched since the end of last year until the second quarter of this year have focused on the luxury segment, with prices ranging from VND 100 to 150 million per square meter, or even higher in the city center.
Soaring housing prices are largely driven by the steep rise in land prices over the past year. |
Recently, the Government has instructed the Ministry of Construction to identify the reasons behind the surge in real estate prices and promptly come up with solutions to reduce the factors driving up these prices and increase the housing supply.
The government has also directed the Ministry to strictly handle speculative and manipulative behaviors, as well as the dissemination of false information aimed at creating artificial demand and defrauding people.
At a recent press conference for the second quarter of 2025, Deputy Minister of Construction Nguyen Danh Huy shared that identifying the reasons for the increase in real estate prices is a challenging task. The Ministry has assigned the Department of Housing and Real Estate Market Management to research and clarify the issue. Given the significant social impact, this matter requires careful consideration and thorough research to identify effective solutions to curb rising housing prices.
Land Prices Surge, Pushing Up Housing Costs
Mr. Nguyen Quoc Hiep, Chairman of the Vietnam Contractors Association, pointed out that the real estate market is facing a situation where “land prices chase housing prices, and housing prices chase land prices,” creating a vicious cycle that ultimately burdens buyers. He attributed this partly to the lack of regulation, which has allowed land prices to soar to potentially become one of the highest in the world.
According to Mr. Hiep, within the same project, a few months’ difference in land allocation decisions can result in a 20% price increase, which is unreasonable and will inevitably lead to higher housing prices.
“It’s high time for authorities to step in and regulate land prices in a harmonious manner. Additionally, lengthy administrative procedures, such as land valuation, can incur significant financial costs for businesses, including interest expenses or additional land costs amounting to tens or even hundreds of billions of dong. These costs are ultimately reflected in the selling prices. To control housing prices, there is a need to establish a state management mechanism for land prices to prevent the current situation of price escalation and expedite administrative procedures to reduce financial costs for enterprises,” Mr. Hiep added.
Mr. Hiep further stated that while the increase in construction material prices averages around 15%, the surge in land prices makes it unlikely for project prices to decrease in the foreseeable future.
Assoc. Prof. Dr. Nguyen Quang Tuyen, Head of the Economic Law Department at Hanoi Law University, shared his insights: “Currently, land-related legal provisions have undergone significant innovations. While this represents a breakthrough, it also puts pressure on local governments. We are implementing Resolution 18, which involves removing the land price framework and adopting a land price list. Notably, the responsibility for establishing the land price list falls on the local People’s Committees, who must take charge of the process and bear the consequences. Alongside this, we have laws, decrees, and circulars in place. Overall, the legal framework is improving and becoming more suitable, but when it comes to specifics, there are still many limitations,” said Mr. Tuyen.
Elaborating on this issue, Mr. Tuyen explained that there are five principles for determining land prices, including the “market principle.” However, no one can explain what the “market principle” entails, nor are there clear guidelines on how many market principles exist and which one should be applied in land valuation. This ambiguity poses challenges for local governments in their implementation.
Moreover, the real estate market has witnessed the “extinction” of housing units priced at VND 40-50 million per square meter, making it impossible for salaried workers and members of the armed forces to afford a home. Therefore, it is crucial to clarify what is meant by the market principle.
“Additionally, the five principles for determining land prices must be ‘harmonious.’ So, what does harmonious mean? This also needs to be clarified. In my understanding, harmony means ensuring that the interests of all parties involved are protected. If the current situation of land price determination persists, businesses will surely be ‘stuck,'” Mr. Tuyen added.
A preliminary statistic reveals that 25 localities have issued adjusted land price lists, effective until the end of this year. Ho Chi Minh City’s adjusted land price list, effective from October 31, 2024, shows a 2.7 to 38-fold increase, with the highest price reaching VND 687.2 million per square meter. Hanoi’s recently issued decision on land price adjustment for 2025 shows a 2 to 6-fold increase compared to the previous list, with the highest price at VND 695.3 million per square meter…
Ngoc Mai
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