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Everything you need to know is included in our Vietnam Property Pack
Are you considering buying real estate in the land of Dragon Descendants? Are you wondering if the prices are adequately positioned?
Market timing is a topic where everyone has their own ideas. The Vietnamese real estate agent you consulted might advise you that now is the opportune time to buy property, while your childhood friend from Hanoi may suggest exercising more patience before making a decision.
At BambooRoutes, when we create articles or update our pack of documents related to the real estate market in Vietnam, we prioritize facts and data over opinions and rumors.
We've done extensive research on official reports and government website statistics, resulting in a comprehensive database. Here's what we've learned, which can provide valuable insights for your decision-making process regarding real estate purchase in Vietnam.
Enjoy the article!
How is the property market in Vietnam currently?
Vietnam is, today, a reliable and stable choice for investors
Neutral
If you want to invest in real estate, prioritize stability as it ensures future planning and financial security. It is an information you need as a foreigner looking to buy a property in Vietnam.
Rest assured, Vietnam remains a stable country. The last Fragile State Index reported for this country is 56.2, which is a good performance.
Vietnam is a reliable and stable choice for investors due to its robust economic growth, driven by a young and dynamic workforce, increasing foreign direct investment, and strategic trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Additionally, the government's commitment to economic reforms and infrastructure development enhances its business environment, making it an attractive destination for global investors.
Stability is here. Now, let's dive into the economic forecast.
Vietnam is forecasted to grow massively
Positive
Before buying real estate, evaluate the economic performance of the country.
As per the IMF's forecasts, Vietnam is likely to finish 2024 with a growth rate of 5.8%, which confirms the country's quick development. Regarding 2025, we're talking 6.5%.
That's not all - this impressive growth will keep going on since Vietnam's economy is expected to increase by 28.9% during the next 5 years, resulting in an average GDP growth rate of 5.8%.
Vietnam's expected massive growth means more people and businesses will need places to live and work, driving up demand for real estate. As demand increases, property values and rental prices are likely to rise, offering potential investors the opportunity for significant returns.
Nonetheless, GDP growth is not the only metric to look at.
Vietnamese business owners still don't express confidence in current market conditions
Negative
Although the GDP forecast provides insights, it may not fully capture the local sentiment in Vietnam as it relies on external projections. Luckily, in Vietnam there is an official metric that is frequently updated. This doesn't apply to every country, so we're in luck.
The Business Consumer Index (BCI) is a metric that determines business leaders' confidence in the current and future economic conditions, based on surveys and assessments.
The latest figure for the Business Confidence Index, reported by The Global Economy, is 0 for Vietnam. For interpretation, it's quite low.
Unfortunately, we're on a descending trend. The score, 12 months ago, was at 8.
The current state of business confidence in Vietnam, as in several other countries, is at a minimal level. However, it's crucial not to ignore the potential opportunities within the Vietnamese property market. Although a minimal confidence score may indicate a temporary phase of uncertainty or caution, it is a natural aspect of economic cycles.Now, let's analyze additional data to assess whether this is an opportune time to consider investing in Vietnam.
Vietnam's population is growing and getting a lot richer
Positive
When it comes to buying real estate, population growth and GDP per capita play a significant role, because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Vietnam, the average GDP per capita has changed by 18.3% over the last 5 years. It ranks the country in the top 10 for the growth of this indicator. Furthermore, the Vietnamese population is growing (+6% in 5 years).
This means that, if you purchase a colonial-style house in Hoi An and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be a rise in rental demand in Vietnamese cities like Ho Chi Minh City, Hanoi, or Da Nang in 2025.
Rental yields are average in Vietnam
Neutral
Shifting gears, let's assess the rental yield.
It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in Vietnam is purchased for 10,000,000,000 VND and generates 400,000,000 VND in annual rental income, the rental yield would be 4%.
According to Numbeo, rental properties in Vietnam offer gross rental yields ranging from 1.7% and 4.4%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Vietnam.
It means that your income potential is relatively moderate.
Everything you need to know is included in our Vietnam Property Pack
In Vietnam, inflation is projected to remain minimal
Neutral
Simply put, inflation is the decrease in the value of money.
It's when your customary bowl of phở costs 40,000 Vietnamese đồng instead of 35,000 Vietnamese đồng a couple of years ago.
If you're about to invest in a property, high inflation can benefit you:
- property values tend to increase over time, leading to potential capital appreciation
- inflation can result in higher rental rates, increasing cash flow from the property
- inflation reduces the real value of debt, making mortgage payments more affordable
- real estate can act as a hedge against inflation, preserving the value of the investment
- diversifying into real estate provides stability during inflationary periods
- tax advantages, like depreciation deductions, can help offset the impact of inflation
In accordance with IMF projections, over the next 5 years, Vietnam will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
This data shows that Vietnam is expected to have near-zero inflation then. Unfortunately, buying a property now may not lead to significant price increases or high profits in the future.
Is it a good time to buy real estate in Vietnam then?
Let's wrap things up!
Vietnam is currently seen as a reliable and stable choice for investors, making it an attractive option for those looking to buy property. The country's economic landscape is robust, and this stability provides a solid foundation for investment. With a track record of consistent growth and a government that supports economic development, Vietnam offers a promising environment for property buyers. This stability is crucial for investors who are looking for long-term gains and security in their investments.
Looking ahead, Vietnam's economy is expected to grow by an impressive 28.9% over the next five years, which translates to an average GDP growth rate of 5.8%. This kind of economic expansion is a strong indicator that the country is on an upward trajectory. As the economy grows, so does the need for housing and commercial spaces, which in turn drives up the demand for real estate. This increased demand is likely to lead to higher property values and rental prices, presenting a golden opportunity for investors to reap significant returns on their investments.
Moreover, Vietnam's population is not only growing but also becoming wealthier. This demographic shift means that more people will have the means to invest in property, further fueling the demand for real estate. As the middle class expands, there will be a greater need for quality housing and commercial spaces, which bodes well for property investors. The growing affluence of the population is a positive sign for the real estate market, as it suggests a steady increase in potential buyers and renters.
In addition to these factors, Vietnam's inflation is projected to remain minimal, which is good news for property investors. Low inflation helps maintain the purchasing power of money, making it easier for people to buy and rent properties. According to Numbeo, rental properties in Vietnam currently offer gross rental yields ranging from 1.7% to 4.4%. This range indicates that there are opportunities for investors to earn a decent return on their investments. With stable inflation and a growing economy, 2025 could be an ideal time to invest in Vietnam's property market.
We hope this article has been helpful!. If you need to know more, you can check our our pack of documents related to the real estate market in Vietnam.
-Will real estate prices go up in Vietnam?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.