Vietnam’s fertility rate has dropped to the lowest point in its history and is projected to continue declining in the coming years. This demographic shift poses serious socio-economic challenges, with increasingly visible impacts on the housing market.

As demand for housing weakens, the structure of market needs is shifting toward smaller, more affordable units, as opposed to larger and costlier apartments. This trend is already prompting developers and government authorities to reconsider their long-term strategies to ensure a sustainable and balanced property market.

According to data from the General Statistics Office, the average age for first marriages has risen from 24.1 years in 1999 to 27.2 years in 2024. Meanwhile, the fertility rate in 2024 dropped to 1.91 children per woman – half the level recorded in 1989 – and continues to decline rapidly. In major cities like Hanoi and Ho Chi Minh City, fertility rates are nearing the United Nations' "ultra-low fertility" threshold of 1.3 children per woman.

Several factors contribute to this trend. The Vietnam Association for Real Estate Market Research and Evaluation (VARS IRE) points to rising living costs, particularly skyrocketing housing prices, as a key reason young people delay marriage and childbearing. In the long run, this dynamic will feed back into the real estate market, shaping both supply and demand.

A declining birthrate results in smaller household sizes and fewer new households forming. This leads to a shrinking pool of working-age and family-forming population, the very demographic that traditionally drives real estate demand.

Smaller, smarter, and more affordable homes in demand

As these demographic realities set in, overall housing demand is weakening. Preferences are shifting toward smaller, more cost-efficient properties rather than large, high-priced apartments. The result is lower absorption rates in certain segments of the market, particularly for units that no longer align with evolving demographic and economic trends.

Despite waning demand, housing prices remain high and largely inflexible. This creates a widening affordability gap, especially for young buyers, and makes it harder for developers to sell large, high-value properties. As inventory accumulates and capital turnover slows, liquidity pressures rise. Developers are now being forced to reassess their product strategies, pricing, and financial solutions to stimulate demand.

With prices far outpacing income growth – particularly for young adults – many in this generation are giving up on the dream of homeownership and turning to long-term renting. This shift affects not just housing demand but also broader life decisions, such as marriage and having children, exacerbating the risk of even lower fertility rates in the future.

Learning from international lessons

Experiences from Japan, South Korea, and Singapore reveal that persistently low birthrates combined with high housing prices lead to severe labor shortages and a growing burden on social welfare systems, undermining long-term economic growth.

To avoid similar pitfalls, the Vietnam Association of Realtors (VARS) urges the government to adopt integrated policies. These include controlling housing prices, expanding the supply of affordable housing, providing financial support for young homebuyers, and incentivizing marriage and childbirth to maintain a stable demographic foundation for sustainable development.

Policy solutions for a changing market

First, there is a need to accelerate the development of social housing, particularly in major urban areas with high demand. This includes expanding rental and rent-to-own models, with the government playing a central role in developing and managing the housing stock to meet real needs of low-income and young populations.

Second, the government should continue to create favorable conditions for developers to build affordable commercial housing through policy incentives such as simplified administrative procedures, credit support, or priority points in bidding for public projects.

Third, real estate businesses should be encouraged to shift from “build-to-sell” to “build-to-rent” models. This shift would allow developers to generate stable and sustainable long-term cash flow. Successful models abroad can be replicated through real estate investment trusts (REITs) and public-private partnerships, where the state provides land and infrastructure and businesses handle investment and operations through professional management entities.

PV