Despite the economic standstill brought about by Covid-19 control measures, new launch property prices in Ho Chi Minh City continue to rise unabated. 3Q2021 has seen a new apartment price ceiling in HCMC’s West-Southwest Satellite Urban Region set by a new launch apartment project in Binh Tan District. At present, HCMC’s property market had registered a sharp plunge in the reduction of transactions but sales rate of the mentioned new launch apartment project achieved 100%.
Can this result be driven by speculative demand and the fear of missing out due to limited supply? Or is it due to pent up housing demand and money flowing into real estate during Covid-19 pandemic?
With the continued increase in Vietnam’s housing prices over the past 20 months despite the economic difficulties caused by the Covid-19 pandemic, incomes of majority of the population have sharply been reduced. Are continued rising housing prices likely to trigger a downturn in HCMC’s residential real estate market? 
This article explores the reasons why HCMC’s new launch apartment prices keep increasing and its sustainability.

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▸ 1.New price ceiling in HCMC’s West-Southwest during Covid-19? 

Key Takeaways

  • New price ceiling in HCMC’s West-Southwest region of USD 2,575 per square meter.
  • Strong buyers’ demand and high price acceptance.

Price quantum of Moonlight Centre Point phase 1 (2 blocks) inclusive of VAT for a studio unit averages from USD 83,300 to 90,700. Beside that, 2-bedroom unit price quantum averages USD 113,400 to 171,900. Lastly, price quantum of a 3-bedroom unit averages about USD 208,600. At this price range, a total of 632 units released in phase 1 was 100% sold out. This indicates strong buyers’ demand and high price acceptance, despite the ongoing Covid-19 situation. On the back of strong demand in phase 1 on August 2021, phase 2 of Moonlight Centre Point was launched in September 2021 with units released from a third apartment block. In 3Q2021, at the height of HCMC’s Covid-19 pandemic, Moonlight Centre Point was launched entirely online. This new launch real estate project consists of 4 apartment blocks sitting on a land area of 1.94 hectares and supplies 1304 units in HCMC’s primary housing market. Averagely priced at USD 2,575 per square meter on the useable floor area (inclusive of VAT), Moonlight Centre Point has established a new price ceiling for HCMC’s West-Southwest region.

However, as Vietnam focuses on fighting the Covid-19 outbreak, real estate development and consumption have taken a backstage with significant plunge in housing transactions. Till date HCMC has not been able to get the outbreak under control and social distancing measures will likely remain in place for a long time. Most expats are on the same page with their outlook that HCMC’s real estate market will remain depressed for the rest of the year and even extending beyond. As such, what could be the reasons for strong sale transactions for Moonlight Centre Point despite new price highs and can it even plausible?

▸ 2. Why are new launch project prices increasing?

Key Takeaways

  • HCMC apartment price increases in 2021 despite falling demand.
  • Scarcity of housing due to lower supply in HCMC is the main reason for price increases

The ministry said that there is a severe lack of new housing supply due to the Covid-19 pandemic. It released a report in 2Q2021 saying that there was no new property inventory released in the primary housing market.According to Vietnam’s Ministry of Construction, in 2Q2021, apartment prices in HCMC continued to increase by 5 to 7% quarter-on-quarter. Moreover, on average many localities saw a slight increase in residential real estate of 3%. Vietnam’s leading real estate listing portal also backs this trend stating a 9% year-on-year apartment price increase in August 2021 for HCMC despite falling transactions.

The ministry reaffirmed that despite price increases, Vietnam’s housing market is still stable. Housing supply was still mainly in the mid-end and premium segments while that of affordable housing remains non-existent. In HCMC, there was almost no apartments with prices below USD 1,100 per square meter. The supply of this segment of apartments is increasingly limited while pent up demand is very high, leading to price increases.

The Covid-19 pandemic has brought about an even lower supply of housing in HCMC as developers hold back on new project launches due to market uncertainty and social distancing measures. Thus, the HCMC’s housing market situation is such that the consistent demand for residential real estate cannot be met by supply. This led to scarcity of housing and only one way for prices to be impacted; which is to continue increasing.

▸ 3. Why people accept to buy homes at new high prices?

Key Takeaways

  • Dwindling supply of housing has allowed absorption to catch up, further limiting supply.
  • Speculative demand due to fear-of-missing-out, pent up housing demand, and investors appetite for investments all contribute to high price acceptance

Is it possible that these buying demand are due to speculation? Vietnam’s Ministry of Construction statistics showed that the absorption capacity (buying demand) of Vietnam’s housing market in 2Q2021 was 18% better than the previous quarter. The total number of transactions in the real estate market in 2Q2021 was 29,949 across Vietnam, yet there are only 29,557 properties eligible to be sold. In 2Q2021, there were 3,002 property transactions in HCMC, equivalent to 87% the previous quarter. This indicates that the dwindling supply of housing has allowed absorption to catch up, further limiting supply.

With increasing housing demand and declining supply. In addition to the Covid-19 pandemic acting as a trigger, property buyers are eager to take action and commit to a property purchaser. With the fear-of-missing-out (FOMO) influencing many people’s property buying decisions. Take the following scenario as an example.

A capable young couple with stable incomes has been intermittently looking to invest in a residential property for a couple of years now. Then the pandemic hits, forcing housing inventory and supply to rapidly decrease. They see their peers buying homes while enjoying an increase in real estate value, thus they get serious about buying a property. They find a new launch property and buys it at a higher price. And worries if they were right to buy during the pandemic.

Right now, the launch of new projects available to property buyers looking to buy is at a low. This means homes in the primary housing market will only get more expensive as it is a seller’s market situation. The current situation of HCMC’s housing market evokes FOMO for property buyers. The idea of not acting now and losing the benefits others are enjoying, or worse missing the opportunity to be able to afford a home in the future is very strong.

Is it due to pent up housing demand?

In the past two years, HCMC’s housing market has faced a serious supply shortage. Mainly due to the limited land banks for housing projects in large urban areas. Also, the high cost of land acquisition. And the prolonged real estate project licensing period. Moreover, the continued lengthy inspections and legal checks of already licensed projects restricted new supply even prior to Covid-19. And now with Covid-19 further limiting housing supply, scarcity of new launch projects has forced buyers into a decision. The following scenario is a good example.

A family with children has been debating on getting a new property for a while now. A few years ago, interest rates for a home loan were too high for them to purchase the type of property they wanted. But now with access to developer’s assisted mortgage loans and preferential payment terms to stimulate buying, they qualify for more. More importantly, they feel the pressure of a booming housing market, so they finally decide to commit to buying.

Is it due to investors’ appetite to buy residential properties? 

In general, many economic sectors in Vietnam have reduced production activities due to the Covid-19 pandemic. As such, investors prefer to move capital into HCMC’s booming real estate market to look for better opportunities. 

▸ 4. Where is the money to buy properties coming from? 

Key Takeaways

  • Money flowing into real estate during Covid-19 pandemic fuels demand.
  • Liquidity to buy real estate comes from banks cutting deposit interest rates, profit from securities investments and overseas remittance

More liquidity as banks cut deposit interest rates From 2020 till date, Vietnam is experiencing its lowest GDP growth period caused by the COVID-19 pandemic. This has created difficulties due to reduced incomes of the majority of its population as businesses suspend operations. In a normal scenario, economic crisis tends to drag housing prices down. But HCMC is experiencing a reverse as housing prices continue to increase. The source of money flowing into real estate during this Covid-19 pandemic plays an important role in fuelling the demand.

Despite the housing market experiencing a reduction of transactions, demand is still holding steady. Moreover, new demand is constantly being created through liquidity. On the back of banks cutting deposit interest rates, depositors withdrew their money to pour into the real estate market. Afterall, properties are seen as a form of savings to preserve the value of money, not just a channel for investments.

Profit from securities investment 

Additionally, the rise in Vietnam’s stock market in recent years could possibly be the beginning of a multi-decade surge. Vietnam is following the same “East Asian Development Model” those other Asian countries had pursued to become wealthy, with their stock markets flourishing as their economies grow. Currently, the number of retail stock brokerage accounts in Vietnam equates to around 3 percent of its population.

A series of record-high, monthly account openings has enthused investors and helped the stock market shrug off Covid-19 problems in 2021. New securities accounts in the first seven months hit nearly 721,000, higher than both 2019 and 2020 combined. The VN-Index is now nearly 14 percent higher than its peak in 2018. Vietnam’s stock market is positively correlated to its real estate market. As people profit from securities investing in Vietnam’s stock market, the money tends to be channelled into buying properties.

Resilient overseas remittance 

Equally important is the money flow into real estate from overseas remittance. The total remittances coming to Vietnam in 2020 were worth USD 17.2 billion, making Vietnam the third largest recipient in East Asia and the Pacific. The inward remittances were equivalent to 5% of Vietnam’s GDP. Despite the Covid-19 pandemic affecting the global economy, remittance flows remained resilient in 2020, registering a smaller decline than previously projected.

For many years HCMC has seen inward remittances constantly increase. Some 2 million people from HCMC live abroad, and in 2020 they sent home USD 6.1 billion, up 15% from 2019. Overseas remittances to HCMC were worth USD 2.6 billion in the first five months of 2021. This figure represented a 13% year-on-year increase. Above all, analysts are expecting overseas remittance to HCMC to hit a total of USD 6.5 billion for 2021. Approximately 20% of the remittances go into real estate.


This article is intended to be an informational resource to provide knowledge in guiding real estate investors, home owners, property buyers and sellers to have an overview on how Ho Chi Minh City’s apartment market is currently and what awaits in the future. For more in-depth analysis and opinion on Ho Chi Minh City’s housing market, please speak to any of our real estate agents.