Vietnam Government to Regulate Property Market if Prices Surge Over 20%

Vietnam’s government has implemented an intervention plan to address a potential scenario where property prices surge by over 20 percent within three months. This cautious approach reflects Vietnam’s efforts to stabilize the real estate market as it recovers from the sluggish period during the COVID-19 pandemic.

Government intervention in the scenario of property price hikes

With real estate prices continuing to surge, the Vietnamese government has introduced Decree No. 96/2024/ND-CP (“Decree 96”) to bring the market under control, curb speculation, and protect socio-economic stability.

Decree 96 outlines measures to be taken in response to alarming increases in the real estate transaction price index. Key provisions include:

• Governmental agencies must propose regulatory measures if real estate prices rise by more than 20 percent over three consecutive months.
• In such cases, the Ministry of Construction (MoC) is required to submit market regulation solutions, guided by the government’s directives or the latest market assessments. These assessments will include indices such as real estate transaction prices, transaction volume, and other relevant economic and social indicators.
• The State will also intervene if property market fluctuations threaten Vietnam’s socio-economic stability.

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The MoC will have a 15-day deadline to coordinate with other ministries, ministerial-level agencies, and provincial people’s committees to produce reports assessing the market situation and recommending regulatory measures. These reports will then be submitted to the government for approval.

Delegation of responsibilities to government agencies

Specific responsibilities have been delegated to various agencies under Decree 96:

• Ministry of Construction (MoC): The MoC will propose essential actions concerning policies related to urban planning, construction, housing, real estate business, and development programs for metropolitan areas, housing, and the structure of real estate products.
• Ministry of Planning and Investment: This ministry will be responsible for implementing measures related to investment and bidding policies.
• Ministry of Natural Resources and Environment: This agency will oversee measures concerning land policies.
• Ministry of Finance: The Ministry of Finance will manage proposed measures related to tax, finance, securities, and corporate bond policies.
• State Bank of Vietnam: The central bank will be responsible for developing measures related to credit policies.
• Local People’s Committees: These committees will monitor the progress of real estate projects in their respective areas and propose regulatory measures for the local real estate market as needed.
• National Assembly and National Assembly Standing Committee: These bodies will review and approve the proposed market regulation measures if the scope of regulation exceeds the government’s authority.

Recovery in Vietnam’s real estate prices

As of July, experts have not observed any signs of a decline in Vietnam’s real estate prices, despite a previous period of stagnation.

Ho Chi Minh City (HCMC):
House prices in HCMC have been rising overall, with a 6 percent year-on-year increase in the first half of 2024. Downtown areas have experienced even stronger growth, with double-digit increases. According to the property listing platform Batdongsan, June house prices in District 1 saw an 8.2 percent year-on-year rise, reaching VND255 million (approximately US$10,000) per square meter. Prices in other localities were relatively stable, showing increases between 1.5 and 7.5 percent.

Searches for land sales exhibited the most significant growth in the first half of 2024, up 45 percent year-on-year, followed by searches for apartments (33 percent), villas (25 percent), and shophouses (22 percent).

Hanoi:
The real estate market in Hanoi has been even more heated. Apartment prices in the capital skyrocketed by 31 percent year-on-year in the first half of 2024, while private house prices surged by 32 percent. Prices for land, villas, and shophouses increased by 19 percent, 18 percent, and 10 percent, respectively.

Searches for apartments in Hanoi grew significantly, rising 45 percent year-on-year in the first half of 2024. Searches for private houses increased by 33 percent, shophouses by 27 percent, and villas by 9 percent.

Developers cautious as land price hikes loom

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Property firms are already preparing for anticipated price increases in 2026 by rapidly expanding their land holdings. This cautious approach is driven by recent amendments to the Land Law, which took effect on August 1. These amendments introduce an annual land price list to be implemented starting January 1, 2026. Unlike the previous fixed price framework, the new list is expected to be more aligned with market forces, likely leading to significant land price surges.

For example, a draft of the new price list for HCMC suggests that land prices could increase by a factor of five to ten, with some areas potentially seeing hikes of 15 to 50 times the current prices. These increases are expected to drive up costs for land clearance and property development projects.

The amendment is poised to impact various land types, including agricultural and non-commercial land, prompting developers to race to bolster their holdings and secure a competitive edge in the market.

Outlook

Vietnam’s real estate market is expected to heat up in the near future as it continues to recover from a prolonged period of stagnation. With the government already implementing precautionary measures to address potential “market bubble” scenarios, firms will need to adjust their strategies in anticipation of possible price hikes.

Experts predict that only major companies with substantial resources will be able to launch large-scale projects in prime locations. Meanwhile, smaller developers may need to seek land in less desirable areas or shift their focus to more affordable property segments.

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