A housing project in Vietnam typically passes through nine government agencies, requires over 30 stamps, and takes up to 3,000 days to complete all legal procedures. This bureaucratic mountain adds significantly to the cost of housing.

A well-known economist recently told me: “Housing prices in Vietnam are excessively high. If there’s no strong policy intervention to reverse this trend, the real estate market may become Vietnam’s ‘Achilles’ heel’ - just like in China.”

I was surprised by that argument.

Doesn’t he know that Vietnam’s real estate market differs fundamentally from China’s?

Vietnam is short on supply, while China suffers from oversupply. This core contrast explains why home prices in Vietnam continue to soar, while those in China are plummeting, plunging its property market into crisis.

China’s property crisis: A different picture

According to the latest figures from China’s National Bureau of Statistics, as of August 2025, the country still had 761.7 million square meters of unsold commercial housing, over 400 million square meters of which were residential.

Even though clearance rates have slightly improved month-over-month, the inventory remains massive.

Reuters reported that by mid-2025, about 408 million square meters of housing were completed but unsold, in addition to 441 million square meters still under construction.

This means a vast volume of properties are en route to inventory, continuing to exert downward pressure on prices and liquidity.

Converted, these figures equal roughly 65 to 80 million vacant homes, according to international studies.

This surplus is the legacy of a growth model built on land: local governments relied on land sales, developers borrowed heavily to build, and individuals bought homes for speculation.

When the “Three Red Lines” policy was introduced, credit was restricted, financial chains broke, and the market spiraled into asset deflation.

Home prices dropped across 70 major cities, transactions froze, and panic peaked in the Chinese housing sector.

From being a “wealth creation engine,” China’s real estate industry has become a financial and social burden - with massive inventory, corporate and personal debt levels that may take years to resolve.

Vietnam’s property paradox: Scarcity, not surplus

In contrast, Vietnam faces a severe housing shortage - not due to a lack of demand or construction capacity, but because of legal bottlenecks, overlapping regulations, and a widespread fear of making mistakes among officials.

According to the Ministry of Construction, the number of licensed commercial housing projects has dropped by more than 60% since 2019. Social housing projects have nearly ground to a halt.

In Hanoi and Ho Chi Minh City, the supply of primary market units has fallen to just one-third of what it was between 2016 and 2018, even as urbanization and demand from young, first-time buyers continue to rise.

In 2020, 743 projects were licensed across the country.

By 2021, that number had fallen to just 252, or 34% of the previous year.

The decline continued: 126 projects in 2022, 67 in 2023, 79 in 2024, and only 58 projects licensed in the first half of 2025.

Compared to the 2020 peak, project licensing has plummeted over twelvefold - reflecting a prolonged paralysis in the commercial housing sector.

In Hanoi, only a handful of commercial housing projects have been licensed over the past 4–5 years as local authorities focus on reviewing and reclaiming delayed projects.

According to the City People’s Council, between mid-2022 and mid-2024, Hanoi’s administration handled 705 out of 712 slow-moving projects, covering a total of 11,345 hectares.

Nationwide, as of July 2025, the government reported 2,887 stalled projects with a total investment value of $235 billion and covering 347,000 hectares - a massive reservoir of untapped resources.

The root cause: Procedural gridlock

The chief culprit behind this stagnation is procedural entanglement.

A business executive shared that getting a commercial housing project fully legalized requires dealing with nine agencies, over 30 stamps, and nearly 3,000 days of waiting.

Each month of delay is a month of “dead capital”; each year of delay adds billions of dong in loan interest to the project cost.

And that’s not the worst case.

“Some projects take 20 years to complete, with five years just for licensing.”

That lament from an enterprise was recorded in a National Assembly oversight report two years ago - an answer to the question, “Why do housing prices in Vietnam keep rising endlessly?”

In many provinces, projects take 10–20 years to complete.

Land clearance, zoning, and planning can drag on for years.

Investment approval and construction permits can take nearly five years, while environmental assessments may require up to three.

Determining land-use fees alone can leave businesses idling for years, all while interest payments balloon.

Nguyen Xuan Binh, Deputy CEO of Cienco 5 Land, stated at a recent event: “Prolonged administrative procedures are the main driver of rising home prices. Each year of delay translates into more financial cost that ultimately falls on the buyer.”

According to the Ho Chi Minh City Real Estate Association, 70% of the market’s difficulties stem from legal obstacles.

The Vietnam Chamber of Commerce and Industry (VCCI) notes that real estate regulations are entangled across 15 different laws, plus dozens of decrees, hundreds of circulars, and thousands of sub-legal documents.

A typical example: The Investment Law states that projects delayed over 12 months must be revoked, while the Land Law allows a 24-month extension.

Local officials find themselves paralyzed - revoking projects may breach the Land Law, but extending them may violate the Investment Law.

So, projects get suspended indefinitely.

The PCI (Provincial Competitiveness Index) survey shows that 74% of businesses in 2024 and 73% in 2023 had to delay or cancel projects due to land procedure obstacles.

Behind these statistics are thousands of missed investment opportunities, tens of thousands of unrealized jobs, and an endless upward spiral in housing prices.

Real estate developers build homes, but it's the government that decides whether they can.

Nguyen Xuan Binh put it bluntly: “Developers are just supporting players. The lead actor setting housing prices is the state.”

The government controls the most crucial input - land - while also making and enforcing the laws and procedures for project development.

This dual role has a decisive influence on market function and business health.

When the state holds the keys to land, permits, and pricing, every policy and procedure will inevitably be reflected in the price of housing.

The root of the gridlock lies in overlapping laws - on land, investment, housing, and planning - coupled with long-winded processes and a fear-driven administrative culture shaped by repeated inspections and investigations.

Even among the 250 projects launched to celebrate the 80th National Day anniversary, only 22 were social housing - an alarmingly small figure.

The housing shortage isn’t due to lack of interest but rather the sheer impossibility of execution.

Institutional reform is the only way forward

To truly bring down housing prices, Vietnam must begin with institutional reform - not credit packages or tax incentives.

Because housing prices ultimately reflect cumulative institutional costs built up through layers of bureaucracy.

Vietnam needs a genuine one-stop administrative system, with clear timelines and penalties for delays or evasion.

Laws on land, investment, housing, and construction must be streamlined into a unified, transparent process with clear accountability.

The legislative process must involve open consultations to avoid laws that become obstacles the moment they are enacted.

Once the institutional machine runs smoothly, businesses will no longer need to “ask permission” to act - they’ll simply “follow the law.”

At that point, capital costs, time costs, and administrative costs will stop inflating - and housing prices will fall not by administrative orders, but by reform.

Tu Giang