HCM City – In a report released by the HCM City Department of Construction (DOC), the local real estate market has shown a noticeable trend towards high-end housing, with limited new supply coming to market in 2024. According to the DOC, the past 11 months saw only four commercial housing projects meeting the requirements for sale, offering 1,611 housing units. These high-end properties, priced at an average of VND 9.39 billion each, marked a significant shift in the market, which is increasingly dominated by luxury real estate offerings.
Limited New Housing Projects and Rising Prices
Throughout the year, only 12 housing projects received approval for investment policies. Of these, just one was a social housing project, underscoring the continued scarcity of affordable housing in the city. Additionally, no commercial or social housing projects have been covered by land allocation or leasing procedures in HCM City since the beginning of the year. Only two commercial housing projects were granted construction licenses.
The four housing projects that did meet the necessary criteria for sale this year, all belong to the high-end segment. Together, they represent an estimated VND 15.142 trillion in capital, with each house priced at around VND 9.39 billion. This high cost has made the housing market less accessible to middle- and low-income residents, highlighting the trend towards luxury properties dominating the market.
In total, 31 commercial housing projects are currently under construction, with 31,167 units in various stages of development. However, the overall number of housing units available for sale has plummeted by 90% compared to the previous year, signaling a serious decline in the supply of real estate.
Challenges and Criticisms
Le Hoang Chau, Chair of the HCM City Real Estate Association (Horea), criticized the limited progress in new housing development. The 12 projects approved in the past year represent only one-fifth of the number of projects approved in the years before the COVID-19 pandemic. Chau pointed out that the lack of new supply, coupled with no allocated or leased land for new projects, suggests a growing problem in the market. The ongoing shortage of affordable and mid-range housing products, particularly in the commercial sector, has created an imbalanced and unsustainable market.
Chau further stressed that the high-end housing sector now makes up a large portion of the market, noting that 70% of properties in 2020 were high-end, and this figure rose to 72%, 78.3%, and 68.55% in subsequent years (2022-2023). The lack of affordable housing solutions has left the real estate market in a precarious position, with little to no product offerings for lower- and middle-income buyers.
The Need for a Balanced Market
The imbalance in HCM City’s real estate market has sparked concerns about long-term sustainability. While luxury housing is attracting significant investment, there is a dire need for affordable and mid-end properties to meet the demands of the city’s growing population. Without addressing this gap, the market risks becoming increasingly skewed, leaving a substantial portion of the population without access to adequate housing.
As the city’s real estate landscape evolves, industry stakeholders hope that the government will take action to promote more diverse housing options, particularly for middle- and lower-income groups. This would help stabilize the market and ensure that the supply of real estate is more aligned with the needs of all residents.
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