Skyrocketing Real Estate Prices: When a Motorcycle Can Only Buy You… “A Beautiful Window Frame”

This information was presented by Dr. Vo Tri Thanh, Director of the Brand and Competition Research Institute, at the Q3 and 9-month 2025 Real Estate Market Report event titled “Vietnam Real Estate Market: Identifying Inefficiencies and Solutions.” The event was organized by the Vietnam Real Estate Market Research Institute (Vietnam Association of Realtors).

Soaring Real Estate Prices Harm Low-Income Groups

Specifically, analyzing real estate prices, Dr. Vo Tri Thanh noted that prices have risen far beyond reasonable levels over the years, creating a significant gap with the affordability of the population.

“Adjusted for average inflation, real estate prices should only double in 10 years, but in reality, they have increased by tens of times. While in 1990, a motorcycle could be traded for a house, today it can only fetch a nice window frame,” said Dr. Vo Tri Thanh.

Explaining the price surge, Dr. Vo Tri Thanh stated that this phenomenon stems not only from economic factors but also cultural ones, as Vietnamese view land and property as a long-term investment, keeping demand consistently high. However, the sharp rise in real estate prices, akin to inflation, harms the poor and middle-income groups while distorting investment structures.

He also warned that if capital continues to heavily flow into one sector, the economy could face “Dutch disease,” where an overdeveloped real estate market attracts excessive investment and resources, leading to the decline of other industries.

A notable consequence is the current career choice trend among young people. Many are drawn to two groups of professions: those with a “glamorous” appeal, such as showbiz, KOLs, and KOCs, and those in finance and services, where quick money can be made. Meanwhile, industries requiring manual labor, technical skills, or direct production face growing labor shortages, posing a risk of crisis.

The expert cited the 2008-2009 U.S. crisis, which originated from subprime lending, triggering a chain reaction across the banking system and balance of payments. “We need real estate to develop, but it must be healthy and balanced between growth and macroeconomic stability. The government must carefully calculate the dosage and timing of policies to ensure market growth without risk,” Dr. Thanh emphasized.

Addressing Supply-Demand Issues at the Root

Earlier, Ms. Giang Huynh, Director of Research & S22M at Savills Ho Chi Minh City, argued that the core reason for rising home prices is not primarily speculation but rather a shortage of supply, legal bottlenecks, and increased land and development costs. Consequently, developers often focus on mid- to high-end segments to maximize profits, leading to a supply-demand mismatch.

The primary buyers in the market today are those with genuine housing needs or long-term investors, not purely short-term speculators.

Therefore, instead of tightening credit, policies should focus on addressing supply-demand issues at the root through two main approaches:

First, unlocking supply: Streamlining project approval procedures, accelerating implementation, and resolving bottlenecks for stalled projects through special mechanisms. As supply becomes more abundant and diverse, especially in the affordable segment, home prices will stabilize.

Second, boosting demand: Promoting economic growth, improving incomes, especially for middle- and low-income groups. The goal is for income growth to match or exceed home price increases, enhancing affordability. Simultaneously, developing social housing funds and expanding preferential credit channels to support vulnerable groups is essential.

These two policy groups, if implemented comprehensively, will help resolve market imbalances and foster stable, sustainable development.