I've been closely monitoring the Vietnamese real estate market recently and have noticed some quite interesting phenomena. The housing price-to-income ratio in Hanoi has recently skyrocketed to 27.7 times, which is indeed astonishing – approaching the peak levels of 2016 and far exceeding the past average of 23.35 times. Simply put, buying a house in Hanoi is now much more difficult than before.

What has driven up Vietnam's housing prices? I observe several factors working simultaneously. First is supply-side pressure. Housing in the city center and well-developed infrastructure areas has always been scarce, while demand has remained steady, especially among young people and urban migrants. Second, after liquidity tightened over the past two years, money has started flowing back into real estate, particularly into clearly titled apartment assets that are attracting investors again. Additionally, rising construction and financing costs have pushed up new home prices, and the secondary market has followed suit.

Interestingly, Vietnam and China do share some similarities in real estate culture. Homes account for 60-70% of household assets, homeownership rates exceed 90%, and the housing price-to-income ratios are high. But it’s important to note that Vietnam’s urbanization rate is only 45% now, far below China’s 65-67%, which means there is still significant room for actual housing demand.

Compared to China, the differences are even clearer. China has experienced negative population growth since 2022, with a severe housing surplus—reportedly enough for 150 million more residents. Each year, 4 million new units are built, and the crisis is fundamentally due to excess supply and high leverage. Vietnam is different; its population is still growing, urbanization is far from saturation, with only 100k units completed annually, yet there is a shortfall of about 300k units, mainly in affordable and social housing. In short, China’s adjustment stems from having too many houses, while Vietnam faces structural under-supply.

Of course, the rapid rise in the housing price-to-income ratio does carry risks. Buyers’ actual affordability is declining, rental yields are deteriorating, and disparities between different projects and regions are becoming more pronounced. However, compared to China’s past situation, Vietnam’s credit environment is more cautious now, and the legal framework is stricter. Therefore, these risks are more localized rather than indicative of a market-wide bubble.

For owner-occupiers, buying a home is indeed more difficult now, but in the coming years, social housing projects should ease some pressure. Plus, population dispersal to suburban areas and improvements in land use and costs are expected. For investors, caution is advised because the cash flow structure of real estate is changing, and capital appreciation prospects are not as optimistic as before.

Overall, Vietnam’s housing prices have moved from an accumulation phase into a higher valuation cycle. Although this indicator is approaching the levels seen before China’s crisis, Vietnam does not yet have the structural conditions that would lead to a bubble burst. The main difference lies in supply-demand dynamics and demographic structure. Does anyone agree with this assessment?