Vietnam Minister Explains High Housing Prices Driven by Speculation, Supply Imbalance

Vietnam's housing market is experiencing a surge in prices, largely driven by a mismatch in supply and a speculative frenzy, according to the Minister of Construction. Trần Hồng Minh stated that while there is a shortage of mid-to-low-end and social housing, the market is saturated with luxury properties.

This surplus of high-end units, Minh explained, creates an artificial scarcity as investors buy and resell properties, pushing prices beyond reach. He also pointed to the significant costs associated with real estate development, including land use fees, compensation for land clearance, construction expenses, infrastructure development, financing costs, and taxes, all contributing to the elevated prices.

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This leads to speculation, buying and reselling, creating artificial scarcity and driving up housing prices.

To combat this trend, the Ministry of Construction intends to prioritize the development of social and rental housing. The ministry will also work to rebalance the supply chain, curbing the oversupply of luxury properties. Furthermore, local authorities and businesses will be urged to meet social housing targets. The ministry is also exploring market regulation tools like taxes and credit policies to curb speculation and redirect resources toward meeting genuine housing needs.

Minh also addressed concerns about pre-sale regulations, emphasizing that developers must meet legal requirements and financial obligations before receiving deposits. The draft law on real estate business stipulates a maximum deposit of 5% of the selling price, requiring projects to be legally compliant, have land use rights settled, and construction underway before sales can commence. A portion of the final payment will be held in a blocked account until the buyer receives their property ownership certificate.

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We cannot regulate a single price frame.