The pressure of capital costs, as the market gradually moves toward a more balanced state, is not only forcing homebuyers and investors to become more cautious in their investment decisions, but also progressively eliminating market participants that rely excessively on financial leverage or adopt short-term investment mindsets. This, in turn, supports development based on real supply-demand fundamentals.

 

   

 

As previously reported by the Vietnam Association of Realtors – Institute for Real Estate Research and Market Evaluation (VARS IRE), Vietnam’s real estate market is gradually moving toward a more balanced state, with supply increasing significantly and continuing its upward trend. The market is increasingly shifting toward a development model based on real supply-demand balance and the capabilities of participating entities.

 

In this context, credit flows have become a critical factor influencing market dynamics. Given the sector’s heavy dependence on borrowed capital, any changes in credit policy can directly impact liquidity, pricing, and market expectations.

 

According to the State Bank of Vietnam, as of December 31, 2025, outstanding credit to the real estate sector by credit institutions reached approximately VND 4.74 quadrillion, up 36.24% compared to December 31, 2024—higher than the overall credit growth of the economy—and accounting for 25.53% of total system-wide outstanding loans. Of this, credit for real estate business activities reached approximately VND 2.16 quadrillion, representing 45.58% of total real estate credit, up 49.55% year-on-year—about 1.85 times the growth rate of credit for consumption/use of real estate.

 

In response to the rapid growth of real estate credit, the State Bank has required credit institutions to strictly control credit growth from the beginning of 2026. Accordingly, outstanding credit in the first three months must not exceed 25% of the annual growth target (around 15%). Notably, real estate lending at each bank must not grow faster than overall credit growth, in order to mitigate risks as the market shows signs of accelerating after a period of slowdown.

 

Amid tighter credit control, many commercial banks—especially state-owned banks—have simultaneously raised real estate lending interest rates to levels significantly higher than those applied to consumer or production-business loans.

 

VARS IRE believes that rising interest rates at this stage serve both as a “stress test” for the market’s resilience and as a natural filtering mechanism for investment models heavily reliant on financial leverage.

 

           

 

The end of the “cheap money” era is forcing the entire real estate ecosystem—from homebuyers and individual investors to project developers—to restructure their decision-making mindset, transitioning from rapid expansion to risk management, and from short-term expectations to a more sustainable long-term approach.

 

Research data from VARS IRE indicates that real estate liquidity is declining, especially in previously overheated areas, as capital flows no longer seek quick profits but prioritize safety, stability, and risk control. In a context of high interest rates and unpredictable macroeconomic variables, purchasing property for investment—especially when using financial leverage—requires careful consideration.

 

Since late October 2025, mortgage interest rates have risen sharply, placing significant pressure on borrowers. Many banks are applying post-preferential rates of 12–14% per annum, with some periods reaching up to 16% per annum. Previously, many borrowers had accessed loans with teaser rates of only 5–6% per annum, fixed for just 3–6 months. Once switched to floating rates, actual capital costs surged, disrupting initial financial plans—especially for individuals leveraging preferential loans for short-term speculation.

 

     

 

Structural risks also lie in time lags. Buyers from the 2023–2024 period still maintain a certain safety buffer despite rising rates. However, risks may become more apparent in 2027–2028, when buyers from 2025—who purchased at high price levels with significant leverage—simultaneously exit grace periods for principal repayment and preferential rates. If incomes do not increase accordingly and price growth remains limited, financial pressure will become more evident.

 

In this context, rising mortgage rates are driving the market into a phase of “natural selection,” where highly leveraged, short-term investment models increasingly reveal their vulnerabilities.

 

Rising capital costs are not only changing buyer and investor behavior but also reshaping the entire operational logic of the market—from liquidity, pricing, and product development strategies to long-term investment approaches based on data, cash flow, and financial risk management.

 

The sharp increase in financial costs is also altering the behavior of both end-users and investors. First-time homebuyers and young households tend to delay purchase decisions, continue renting, or move to suburban areas where prices are approximately 30% lower.

 

On the investor side, those with moderate financial capacity and high dependence on loans are shifting into a defensive and wait-and-see stance, slowing market liquidity and making capital flows more selective. However, not all capital is leaving the market. Investors with strong financial capacity and low leverage continue to deploy capital, but with stricter criteria: products must align with financial capacity, have clear legal status, and prioritize stable rental income rather than purely price appreciation.

 

Meanwhile, supply is expected to increase significantly as hundreds of projects are legally cleared and numerous large-scale urban developments are newly approved and implemented, providing more than 100,000 units in the coming year. Reduced scarcity pressure will help rebalance supply and demand. However, prices are unlikely to decline sharply due to rising land, construction, capital, and compliance costs. Instead of broad-based price declines, the market will see strong differentiation: legally transparent, reasonably priced products tied to real infrastructure will maintain liquidity, while overpriced assets exceeding their income-generating potential will face difficulties.

 

In addition to financial risks, another structural risk lies in information asymmetry, where buyers and investors are always at a disadvantage compared to sellers, brokers, exchanges, and developers. The development of a real estate identification system integrating legal, planning, transaction, and pricing data will help enhance transparency and address this issue. As data systems become more complete, investment decisions will increasingly rely on data analysis rather than rumors, helping restore confidence in the medium and long term and improve market liquidity.

 

In this new context, VARS IRE believes that advantages will belong to individuals and organizations with strong financial capacity and long-term thinking.

 

Opportunities still exist for investors who select products priced in line with their income-generating value, particularly in areas benefiting from infrastructure and clear planning. Investment decisions are no longer solely about expected price increases but must consider a combination of factors, including stable rental income, financial safety margins, and value appreciation potential tied to infrastructure, planning, and actual living quality. For end-users with accumulated savings, leveraging grace periods or interest support policies from developers can help optimize cash flow in the initial phase.