Housing supply imbalance persists despite strong economic fundamentals

Housing supply imbalance persists despite strong economic fundamentals

Hanoi and Ho Chi Minh City continued to face a widening supply-demand imbalance in their housing markets in the first quarter of 2026, driven by a persistent shortage of affordable housing despite solid macroeconomic fundamentals.

Cao Thi Thanh Huong, deputy director of Research at Savills Vietnam

Cao Thi Thanh Huong, deputy director of Research at Savills Vietnam, delivered these remarks in a keynote speech at VIR's real estate seminar on May 12.

"The fundamentals of Vietnam’s economy remain on an upward trajectory. GDP growth and credit expansion have both stayed at healthy levels, inflation has been well contained, and retail sales of goods and services continue to post solid gains," said Huong.

"These factors are providing support for the commercial real estate market, including hotels, serviced apartments, shopping malls, and office buildings. However, the residential market is facing a number of emerging challenges, particularly related to exchange rate volatility, the gradual increase in preferential interest rates, and rising floating interest rates for house purchasing," she added.

According to Savills Vietnam, apartment prices have continued to increase in both Hanoi and Ho Chi Minh City. In recent years, both markets have experienced a pronounced shortage of affordable housing. During the 2012–2018 period, affordable housing accounted for more than 80 per cent of total supply and transactions in both cities. However, over the past five years (2021–2025), this segment has become increasingly scarce.

In Ho Chi Minh City, affordable housing represented less than one-third of the market. In Hanoi, it accounted for less than 5 per cent. This means that mid- and high-end products now dominate the vast majority of transactions and largely shape market activity in the country’s two largest urban centres.

Huong pointed out that this trend continues to linger into 2026. Affordable housing accounts for only 29 per cent of primary supply in Ho Chi Minh City. The situation is even more concerning in Hanoi, with no new affordable apartment launches recorded during the first quarter.

"In the centre of Ho Chi Minh City, with a population of around 10 million people, fewer than 5,000 primary apartments were available for sale," Huong said. "This level of supply is extremely modest relative to the city’s scale and housing demand. Given a population growth rate of 1–2 per cent, we estimate that both Hanoi and Ho Chi Minh City each require approximately 50,000 new housing units per year to broadly meet genuine end-user demand."

However, housing supply in both cities has remained constrained for several years and has fallen well short of meeting rising demand. Combined with elevated home prices, this has weighed on market performance. In Ho Chi Minh City, the absorption rate stood at only around 41 per cent.

"Hanoi has presented a somewhat more positive supply outlook, supported by several major developers and the suburbanisation of new growth corridors surrounding the capital," Huong said. "Primary supply in Hanoi was roughly double that of Ho Chi Minh City, and transaction volume was also approximately twice as high, with around 5,000 units sold in the first quarter. Even so, the absorption rate reached only 43 per cent. Developers don't focus on the affordable housing segment, so transactions are concentrated in the mid- and high-end apartment market."

VIR