LOW HOUSING ABSORPTION RATES: WHAT SHOULD DEVELOPERS CHANGE BEFORE LAUNCHING NEW PROJECTS?

1. Supply Rises, but Transactions Fail to Keep Pace

According to VARS IRE, Vietnam recorded 31,844 newly launched residential units and 12,520 transactions in Q3 2026, representing an absorption rate of 39.3%—the lowest level in two years, according to the organization’s report. VARS IRE also noted that prospective buyers continued to research and visit projects, but the conversion rate from interest to completed transactions declined.

A DXS-FERI report cited by Thanh Tra newspaper stated that new supply reached 49,657 units in the first nine months of 2026, up 33% year on year, while the number of absorbed units stood at 32,469, down 16%. In Q3 alone, primary-market absorption fell 36% year on year.

These figures come from different research organizations, each using its own scope and statistical methodology. They should therefore not be combined to calculate a single market-wide absorption rate. Nevertheless, they indicate mounting pressure on market liquidity as new supply increases and buyers become more cautious.

2. Affordability Becomes a Key Consideration

According to VARS IRE, average apartment prices in Q3 2026 reached approximately VND 79.3 million per square meter in Hanoi, VND 88.3 million in Ho Chi Minh City, and VND 68.9 million in Da Nang. These are average figures reported by VARS IRE and should not be interpreted as prices applicable to every project or market segment in these cities.

In Ho Chi Minh City, VOV, citing data from CBRE, reported that the average primary apartment price in Q3 reached approximately VND 75 million per square meter of net internal area, while the absorption rate for newly launched supply stood at 45%. The average secondary-market apartment price was approximately VND 60 million per square meter of net internal area. These figures reflect CBRE’s specific market coverage and methodology, so they cannot be directly compared with VARS IRE’s averages without first reconciling the calculation methods.

Financial pressure is another factor to consider. According to DXS-FERI data cited by Thanh Tra, floating interest rates on property loans commonly ranged from 13% to 15% per year during the first nine months of 2026. A survey of 968 customers conducted by the organization found that 74% considered project legality a priority, 72% prioritized the developer’s reputation and the selling price, and 67% focused on location and connectivity. Meanwhile, 82% needed at least three months to consider a purchase before making a decision.

These findings suggest that housing affordability cannot be assessed solely by the selling price per square meter. The total property value, the buyer’s equity contribution, borrowing requirements, interest rates, and monthly repayment obligations all influence purchasing decisions.

Consequently, lowering the selling price may not necessarily make a property more accessible if the overall financial commitment remains beyond the target customer segment’s means.

3. Demand Is Becoming More Segmented by Price Point and Affordability

When considering a home purchase, buyers may evaluate several factors simultaneously, including legal status, developer reputation, construction progress, infrastructure, practical value, and payment terms. However, the relative importance of each factor varies depending on the buyer’s purpose and financial capacity.

This can lead to different sales outcomes for projects located in the same area. A convenient location may not be enough to create a competitive advantage if the total property value exceeds buyers’ budgets or the payment schedule does not align with their cash flow.

Savills data on Hanoi’s apartment market showed that approximately 3,800 apartments were sold in Q3 2026, down 26% quarter on quarter and 48% year on year. Grade B apartments accounted for 73% of total transactions.

This transaction share reflects the market’s sales composition during the period, but it does not establish that all Grade B projects have strong absorption rates. For developers, the key question is which price points, total unit values, and product configurations best match the needs of their intended customer segments.

4. Price Cuts Alone May Not Resolve Liquidity Challenges

Price adjustments have emerged in certain markets and projects. However, it is important to distinguish price reductions recorded at individual projects from broader market-wide price trends. Secondary-market data for Ho Chi Minh City reported by VOV, citing CBRE, showed that some projects with a high proportion of investor-owned units recorded price declines of more than 10%. This does not mean that the entire market experienced reductions of the same magnitude.

If buyers still need to borrow a substantial portion of a property’s value and face high interest rates, a price reduction may not be sufficient to bring repayment obligations within an affordable range. Rather than focusing solely on whether to cut prices, developers need to assess the total financial commitments buyers must meet throughout the payment period and loan term.

According to Thanh Tra, some developers have introduced measures such as reducing initial payments, extending payment schedules, providing interest-rate support, or granting principal repayment grace periods. Some programs have brought scheduled payments down to approximately VND 6–8 million per month or 1% of the property value per month. These are examples of arrangements offered under certain programs, not standard policies across the entire market.

Such incentives can ease upfront cash-flow pressure, but they do not necessarily reduce the total cost of purchasing a home. Their actual effectiveness depends on the terms of the incentives, the support period, the interest rate after the preferential period ends, and the contractual payment schedule.

For developers, selling prices, payment schedules, interest-rate support policies, and project cash flow need to be assessed together. An effective policy must balance buyers’ repayment capacity with the project’s funding requirements and implementation schedule.

5. New Project Development Must Start with Purchasing Power

Liquidity risks can emerge before a product reaches the market, beginning with site selection and decisions about the product mix.

If market research focuses primarily on competitors’ selling prices or a location’s potential for capital appreciation, developers may fail to fully assess whether their target customers can afford the proposed products.

Several questions need to be answered from the outset: How much equity can prospective buyers contribute? How much can they borrow? How much can they allocate to monthly debt repayments? What unit sizes do they need? Are they buying for owner-occupation or investment? These findings must then be assessed against land costs, development expenses, financing costs, and projected selling prices.

Only then can developers make better-informed decisions about project scale, apartment sizes, product mix, handover specifications, and pricing strategies. Market research should therefore do more than support marketing activities; it should directly inform product design and investment feasibility assessments.

6. Legal Status and Infrastructure Influence Purchase Decisions

The DXS-FERI survey cited by Thanh Tra found that 74% of participating customers prioritized project legality. This result reflects the preferences of the surveyed group and should not be treated as fully representative of all homebuyers. Nevertheless, it is an important signal when assessing factors that influence purchasing decisions.

For developers, legal due diligence must be considered alongside project implementation progress and compliance with the legal requirements for bringing properties to market. Infrastructure should also be assessed based on existing conditions and substantiated development plans, rather than expectations of future price appreciation alone.

For owner-occupiers, connectivity to workplaces, schools, healthcare facilities, retail areas, and essential amenities can directly affect a property’s practical value. Site selection should therefore take into account legal status, planning regulations, existing infrastructure, and infrastructure projects supported by clearly established plans.

7. Moving from “Marketable” to “Capable of Being Absorbed”

The 39.3% absorption rate reported by VARS IRE is an indicator of transaction performance for newly launched supply in Q3 2026. However, assessing the development potential of an individual project requires a more detailed examination of customer segments, pricing, total property values, and payment structures.

Before committing to an investment, developers need to answer a series of questions: What types of products does the market demand? How much can the target customer segment afford? Which unit sizes are most suitable? Do the project’s legal status and infrastructure meet its requirements? Can the projected selling price be supported by the total investment and financing costs? And is the proposed payment structure suitable for both buyers and the developer’s cash flow?

These assessments should be conducted during the pre-feasibility stage and updated whenever assumptions about selling prices, costs, interest rates, or market demand change. If absorption potential is evaluated only after the product has been designed or the project has entered implementation, the scope for making adjustments is generally more limited.

8. Market Research on Purchasing Power Must Precede Development Decisions

Q3 2026 data indicate that Vietnam’s residential property market is facing transaction pressure, while buyers must weigh selling prices, borrowing capacity, and confidence in project delivery. However, data from a single quarter are insufficient to establish a long-term trend for the entire market or for every property segment.

For developers, the key implication is that purchasing power must be integrated into investment decision-making, rather than focusing exclusively on location, planning considerations, and expected profit margins. Site selection, product mix, handover specifications, total investment costs, and financing structures should all be evaluated in relation to the affordability of the target customer segment.

A project with strong absorption is not necessarily the cheapest one. Rather, it is one whose products and financing arrangements align with the needs, purchasing power, and risk tolerance of its intended customers. Market research into purchasing power must therefore take place before developers finalize their product development strategies and should be continuously updated throughout the project lifecycle.