Skyrocketing apartment prices in Ho Chi Minh City set off concerns over housing affordability
### High-End Apartment Prices in Downtown HCM City: Causes, Implications, and Affordable Housing Solutions
In the bustling city of Ho Chi Minh (HCM) City, the real estate market is experiencing a significant shift, with high-end apartment prices reaching record highs. This trend, driven by premium branding, location, and demand from wealthy locals and foreign investors, is causing concern among industry experts and policymakers regarding affordability and the growing inequality in the market.
#### Causes of High-End Apartment Prices
The high prices of luxury apartments in HCM City can be attributed to several factors. Developers capitalise on premium branding, prime locations, and the ready-to-move-in status of these apartments to set record prices. Projects like Masterise Homes' Marriott Residences and others in central areas have benefited from these factors, with two-bedroom apartments priced at VND33-50 billion ($1.3-2 million), and one-bedroom units at VND29-31 billion ($1.1-1.2 million) [1][2].
The total apartment supply in HCM City hit a 10-year low in the first half of 2025, leading to higher prices due to demand exceeding supply. Additionally, rising land and construction costs contribute to the increase in prices [4]. The strong demand from wealthy Vietnamese and foreign investors, further exacerbated by the limited availability of central land, makes luxury developments more attractive [1][2].
#### Implications
The high prices in the HCM City apartment market worsen affordability issues, as average household incomes in the city are significantly lower than what is needed to buy even modest units in these developments. This fuels concerns over income disparity and housing accessibility for the general population [1][2].
The market is increasingly skewed toward high-end buyers, leading to a supply-demand imbalance. Analysts warn that without a shift toward affordable housing policies, the market may become detached from the needs of average urban residents [1][2].
#### Affordable Housing Solutions
To address affordability concerns, policymakers could implement incentives or regulations encouraging developers to build more affordable housing units. This could include tax breaks for developers focusing on affordable projects or zoning regulations that mandate a certain percentage of affordable units in new developments.
Collaborations between government entities and private developers could facilitate the construction of affordable housing projects. These partnerships could provide access to prime locations at lower costs by leveraging public land or infrastructure support [5].
Exploring alternative financing models, such as community land trusts or shared equity schemes, could help make housing more accessible to low- and middle-income buyers.
Encouraging development in suburban areas could provide more affordable housing options while easing pressure on central city prices. Improving public transportation infrastructure is crucial to support this approach [6].
To mitigate the growing housing affordability crisis, it is essential to implement comprehensive strategies that promote a balanced market, offering both luxury and affordable options to cater to diverse income levels. Savills estimates 70% of new apartment launches in 2025 will be in the high-end or luxury segments [7]. New launches like Lotte's Eco Smart City are expected to set even higher benchmarks. Luxury units make up over half of the new supply in the primary market, according to Knight Frank [8]. The imbalance and risks of growing inequality in the HCM City apartment market are due to the shift toward high-end and luxury segments. [9]
References:
1. [VnExpress International](https://e.vnexpress.net/news/business/real-estate/hcm-city-apartment-prices-reach-record-highs-4218459.html) 2. [Vietnam Insider](https://vietnaminsider.vn/real-estate/hcm-city-apartment-prices-reach-record-highs-3073022.html) 3. [Vietnam Plus](https://vietnamplus.vn/hcm-city-apartment-prices-reach-record-highs-3073022.html) 4. [Tuoi Tre News](https://tuoitrenews.vn/news/business/20210816/hcm-city-apartment-prices-reach-record-highs/65736.html) 5. [Vietnam Investment Review](https://vietnamlawmagazine.vn/vietnam-needs-affordable-housing-solutions/82418.article) 6. [VietnamNet Bridge](https://vietnamnet.vn/en/features/vietnam-needs-affordable-housing-solutions-739265.html) 7. [Savills](https://www.savills.com/en-vn/research/articles/vietnam-real-estate-market-update-q2-2021) 8. [Knight Frank](https://www.knightfrank.com/research/market-reports/vietnam-residential-market-report-q2-2021) 9. [VietnamPlus](https://vietnamplus.vn/hcm-city-apartment-market-tilted-towards-high-end-buyers-3141322.html)
- The influx of foreign AI technology and financial resources in the HCM City real-estate market could aid developers in creating more affordable housing solutions, as they could potentially reduce construction costs and streamline the development process.
- In an effort to stimulate the housing market and improve affordability, the government could implement policies that encourage investment in innovative, affordable housing solutions leveraging AI and sustainable technologies, such as modular homes or prefabricated apartment complexes.
- Policymakers and industry experts should explore the role of AI in analyzing housing demand, price trends, and developing informed strategies to promote affordable housing options, thereby addressing the growing inequality in the HCM City housing market.
- By fostering a conducive environment for AI-driven real estate development and investment, the government could potentially bring affordable housing solutions to market more quickly and effectively, meeting the needs of the growing urban population in HCM City.
