Reduce land prices to cool down current housing prices in Ho Chi Minh City

The current high apartment prices are said to come from input costs, the most significant of which are land costs and land use fees.

According to market research reports from real estate companies, housing prices continue to increase. Compared to 5 years ago, apartment prices in Ho Chi Minh City have doubled, especially in the high-end segment. The dominance of this apartment segment has pushed up housing prices, making it increasingly difficult for middle-income earners to access housing.

House prices increase steadily

Mr. Phong, a resident of An Lac Ward (HCMC), said that a few years ago he bought a luxury apartment in Binh Thanh District (old) for 4 billion VND, which has now increased to 9 billion VND. It is worth noting that although the price has nearly doubled, there is still no sign of stopping.

Meanwhile, a new project in Binh Trung Ward (HCMC) has just offered apartments for sale at over VND90 million/m², double the estimate from 5-6 years ago. In Phu My Hung urban area, considered the most luxurious in HCMC, apartment prices currently range from VND80-95 million/m². While 7-8 years ago, they were only about VND37-38 million/m².

The latest report from the Ho Chi Minh City Real Estate Association (HoREA) shows that from 2020 to 2023, the high-end housing segment accounts for about 70% of the total market supply. This causes the market to develop unbalanced, the "pyramid" model of housing is reversed.

In the first 6 months of 2025 alone, Ho Chi Minh City only had 4 commercial housing projects implemented, with a total of 3,353 luxury apartments, worth more than 10,239 billion VND. There were no projects in the mid-range or affordable housing segment. Meanwhile, social housing was also very modest, with only 205,000 m² of construction floor space, equivalent to 4,100 apartments, reaching only about 11.7% of the plan by 2025. According to Mr. Le Hoang Chau, Chairman of HoREA, housing prices have increased continuously over the past many years and are currently at a high level. A luxury apartment costs up to 90 million VND/m², equivalent to about 9.7 billion VND/unit, far beyond the affordability of middle-income people.

Apartment prices in Ho Chi Minh City have more than doubled in the past five years.

Savills Vietnam assesses that the housing market in Ho Chi Minh City has been facing a serious shortage of supply over the past 5 years. Although the city set a target of developing 235,000 new houses in the 2021-2025 period, it has only completed 24% of the plan, meaning it is still short of nearly 179,000 units. In the second quarter of 2025, Ho Chi Minh City will only have 1,600 new apartments on the market, bringing the total primary supply in the first 6 months to 6,800 units. However, the absorption rate only reached 45%, meaning 3,800 units were traded. The main reason is said to be the slow approval process and legal barriers.

Land use fees are too high

Mr. Vo Hong Thang, Deputy General Director in charge of DKRA Consulting and Investment Director of DKRA Group, said that land costs, including purchase costs, taxes, legal fees, loan interest, etc., currently account for the majority of total project investment costs, while construction costs or apartment quality are easier to control. Therefore, he expects that when projects with legal problems are resolved, combined with a reduction in land use fees, real estate prices in Ho Chi Minh City will "cool down".

Dr. Pham Viet Thuan, Director of the Ho Chi Minh City Institute of Economics and Natural Resources and Environment, said that the increase in land prices and the surplus method in determining land use fees are the core reasons for the high increase in apartment prices. According to him, applying land prices close to the market as stipulated in the Land Law and Decree 71/2024 causes the market to be pushed up by "virtual" prices, especially after the removal of the land price framework. Therefore, he said that there should be adjustments in the 2024 Land Law to reduce the land price calculation ratio when changing the purpose of use, in order to control input costs and stabilize real estate prices. Determining land prices in a controlled manner will contribute to reducing housing prices and promoting social security.

At the workshop "Land prices, land taxes... how to make it reasonable" organized by Thanh Nien Newspaper on July 22, lawyer Truong Anh Tu, Chairman of TAT Law Firm, suggested that the state needs to have more reasonable solutions in collecting taxes related to land, especially in building land price lists and tax policies.

According to him, land prices need to be determined to harmonize the interests of all parties, that is, the state does not lose tax revenue, businesses still ensure business efficiency and profit margins, market supply and demand are not disrupted and people still have access. This is a consistent goal that needs to be ensured. That means land prices do not necessarily have to be completely based on market prices.

Ms. Vo Nhat Lieu, Director of PROPIIN Real Estate Project Development Training Institute, pointed out an important variable, which is that land use fees often account for up to 50% of the total project cost, with land being about 20%. Many international investors have hesitated because the valuation process lacks a standard formula and the cost fluctuates unpredictably.

Therefore, she proposed to exempt or significantly reduce the land use conversion fee for households under 300 m², and impose higher taxes on individuals with many plots of land. The land price list also needs to be kept stable for a long enough time, to avoid the situation where localities raise prices too quickly and create a gap between regions, triggering a wave of speculation.

Deputy Minister of Finance Le Tan Can also admitted that the two biggest bottlenecks at the moment are the calculation of "additional payment" and land use fees when converting agricultural land to residential land. He said that the Ministry of Finance has completed the draft Decree amending Decree 103/2024 and sent it to the Ministry of Justice for review before submitting it to the Government for promulgation. The goal is to remove obstacles as soon as possible, because localities continuously report "financially impossible" cases simply because fees and taxes are pushed up too high.

Increase land use coefficient

The HoREA Chairman believes that to reduce housing prices, Ho Chi Minh City needs to prioritize increasing the supply of social housing and at the same time strongly reform administrative procedures. Specifically, it is necessary to issue a pilot resolution and amend the Housing Law 2023 to assign the right to approve social housing projects to the Department of Construction, instead of having to go through the Investment Law as at present.

In addition, he proposed amending Decree 100/2024/ND-CP to increase the land use coefficient for social housing projects to a maximum of 1.5 times. This will help increase the number of apartments on the same land area by 50%, thereby reducing apartment prices.

In addition, localities need to coordinate synchronously to shorten the time for planning approval and licensing. The development of low-cost commercial housing also needs to be encouraged through preferential credit policies, especially for young people. The State also needs to restructure the market by encouraging businesses to shift to the affordable segment, combined with the program to build 1 million social apartments by 2030.

Another important solution is to amend the Law on Real Estate Business to allow the transfer of projects that have not fulfilled their financial obligations on land, provided that the new investor fulfills these obligations. This will help revive "shelved" projects and increase supply.

Source: https://nld.com.vn/giam-gia-dat-de-ha-nhiet-gia-nha-196250722220941319.htm