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Housing Prices Keep Soaring: Causes and Solutions

Housing prices in major cities have surged since late 2023, far beyond what most people can afford. Experts point to several key reasons: high project input costs, limited supply, speculative behavior, and overly high profit expectations from developers.

At a meeting of the Central Steering Committee on Housing and Real Estate on September 22, Prime Minister Pham Minh Chinh stressed: “So many people need homes, but prices are too high for them to buy. Apartments costing 70–100 million VND per square meter—who can afford that?”

Rising input costs
According to Le Huu Nghia, General Director of Le Thanh Company, land, construction materials, labor, and financing all contribute to inflated prices. Developers must pay land-use fees almost equal to market value, while lengthy approval procedures raise financial costs. Mortgage rates for property projects range from 10–12% per year in Vietnam, much higher than global averages. All these costs are passed on to buyers. He suggested shortening approval times and lowering land-use fees to reduce housing prices.

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Speculation and limited supply
Dinh Minh Tuan, Business Director at Batdongsan.com.vn, noted that when supply is scarce, developers can dictate prices. Speculators also manipulate the apartment market by buying up a small portion of units in projects and holding them to keep prices high. They use tactics like “deposit today, price increase tomorrow,” which fuels herd mentality and drives prices even higher.

Market psychology and policy gaps
Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, highlighted that market psychology strongly influences transactions. The same apartment may be sold high or low depending on sentiment. In addition, land clearance and land-use fees account for a large share of project costs. Without adjustments, lowering housing prices will be difficult.

Chau proposed multiple solutions at once: clear legal bottlenecks for nearly 2,900 pending projects, revise land-use fee policies, impose taxes on vacant properties and second homes to curb speculation, and increase housing supply through planning and development strategies.

Conclusion
High housing prices are the result of combined factors: costly inputs, regulatory hurdles, scarce supply, and speculation. Without coordinated government measures and more reasonable profit margins from developers, affordable housing will remain out of reach for most people.

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