The oddities of Vietnam’s property market, explained

Have the country’s real estate prices become untethered from the basic economic forces of supply and demand ?

Property prices in some parts of Vietnam are very high at the moment. In Hanoi and Ho Chi Minh City, apartments and condos are going for thousands of dollars per square meter. Vietnam’s 2024 per capita GDP was around $4,300, which means most people in the country’s major cities are hopelessly priced out of the market.

In a well-functioning market, high property prices signal that there is too much demand relative to supply, and developers will build more in order to reap high profits. As more housing supply hits the market, prices will come down. But there are a few oddities about Vietnam’s current property market that are worth dissecting.

The first one is that high prices in Vietnam’s largest cities are not, as we might expect, driving a big boom in new construction. In Ho Chi Minh City, only around 2,500 new units hit the market in the third quarter. And the majority of these are high-end units. So even as skyrocketing prices make housing in the city unaffordable, a small amount of new supply is being built and even that is targeted at wealthy consumers and well out of the price range for typical buyers.

Another odd thing is that, as you move outside of major urban areas, a lot of new housing is being built and then sitting around unsold. A good example is vacation resorts, where Vietnam’s big developers have been pouring money into tourist hotpots like Phu Quoc. Yet it seems unlikely they are building in response to demand, as much of this new construction is sitting around as unsold inventory. According to reports, just 45 out of 2,268 vacation villas had been sold through the first seven months of 2025.

This paints a rather strange picture of the real estate market in Vietnam. Big cities are seeing prices soar due to a lack of affordable supply. The handful of new units that are being built are high-end and targeted at wealthy buyers. Outside of major cities, we see a construction boom leading to over-supply, which the market is apparently struggling to absorb. As a result, units are sitting empty. All of this suggests real estate prices in Vietnam, both inside and outside major urban areas, appear to have become untethered from the basic economic forces of supply and demand.

One possible explanation is that government policy and regulations, particularly when it comes to construction, are unclear and cumbersome. If there is a lot of red tape just to get a construction permit, developers cannot build quickly in the places where demand is highest. The government is reportedly making efforts to streamline some of these administrative hurdles and send clearer signals to the market.

But if we look at the financials of Vietnam’s big real estate developers, supply constraints don’t seem to be the big problem. Vinhomes is one of the largest property developers in Vietnam, with a market capitalization of around $16 billion. It is majority owned by Vingroup, currently the most valuable publicly traded company in Vietnam, with a market cap exceeding $34 billion.

According to the latest financial statement, as of June 2025, Vinhomes had $6 billion worth of projects recorded on the balance sheet either as inventory or assets under construction. Whether the demand is there or not, it certainly seems like Vinhomes is doing a lot of building.

And this building spree is happening under the umbrella of a big national credit boom. Vietnam’s major banks are pretty highly leveraged, with loan-to-deposit ratios often exceeding 100 percent. Vietnam’s overall credit-to-GDP ratio was 134 percent in 2024, which is high. And a lot of this lending is being funneled into the real estate sector.

Vietnam, we should recall, is a socialist republic that mixes state control with market mechanisms. It is not surprising if the market doesn’t always send the price signal we might expect. But when you have a highly leveraged banking sector making loans to structurally powerful conglomerates deeply entangled in a sector like real estate, and prices in that sector are seemingly becoming disconnected from underlying economic fundamentals like supply and demand, that is something worth keeping an eye on.

By James Guild – The Diplomat – November 28, 2025