According to VIS Rating's Residential Real Estate Sector-H2 2026 Outlook, housing demand weakened significantly in the second quarter as mortgage rates remained high while supply increased sharply in several major markets.
New apartment supply in Hanoi and Ho Chi Minh City rose 33 per cent year on year in the first half, following a 48 per cent increase in 2025. The surge was driven by a series of large-scale projects launched in satellite areas around Hanoi, Danang and Ho Chi Minh City.
Despite the abundant supply, higher borrowing costs have weighed on buyer sentiment. The absorption rate for newly launched housing in Hanoi and Ho Chi Minh City fell to 73 per cent in the second quarter, from 95 per cent in 2025.
The secondary market also became quieter. The number of housing transactions nationwide fell 36 per cent year on year in the first half, as average home loan rates rose to 14-16 per cent this year.
Property prices have also begun to reflect weaker demand. In the second quarter, secondary-market prices fell across a broad range of areas, while primary-market prices remained relatively stable. Apartment prices in central areas of Hanoi and Ho Chi Minh City rose by only about 1 per cent from the previous quarter.
Credit growth slows as bond issuance surges
Weaker demand has coincided with tighter access to capital for property developers. Real estate credit grew by only 8.6 per cent in the first half, down sharply from 15 per cent in the same period of 2025, as regulators continued to curb rapid credit growth in the sector.
Equity fundraising also remained subdued. The total value of share issuances in the first half fell 86 per cent year on year to about VND 350 billion (USD 13.5 million), equivalent to only around 3 per cent of the total value raised throughout 2025.
Under plans approved by shareholders, several mid-sized developers are expected to raise capital in the second half to meet bond obligations and finance project development. Novaland plans to raise funds to repay overdue bonds, while Phat Dat and Hai Phat intend to strengthen resources for project development.
With bank credit and equity issuance constrained, bonds have become a more important source of funding for property companies. Bond issuance reached VND 149.5 trillion (USD 5.8 billion) in the first nine months, up 126 per cent year on year. Issuance was concentrated among several major developers, including Vingroup and Masterise.
Notably, the cost of raising funds through bonds has also increased. The average issuance rate was about 11.4 per cent, 110 basis points higher than a year earlier.
VIS Rating forecasts that real estate bond issuance will remain high in the coming period, driven by refinancing needs for about VND 167 trillion (USD 6.4 billion) in property bonds maturing from the fourth quarter of 2026 through 2027, as well as funding needs for large-scale projects.
Profits rise but cash flow remains weak
According to VIS Rating, listed property developers reported strong profits in the first half, supported by substantial handovers at projects launched in 2024-25.
Revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) rose 89 per cent and 100 per cent respectively year on year, reaching their highest levels since 2022. The results show that the sector's profitability has been significantly supported by project handover progress.
However, improved profits have not been matched by stronger operating cash flow. The debt-to-equity ratio rose to 74 per cent in the first half, from an average of 54 per cent during 2022-25.
VIS Rating said the situation could worsen in the second half as weaker housing demand limits sales and lengthens the time needed to collect payments from buyers.
Developers could also face greater liquidity pressure as sales decline and operating cash flow weakens while debt obligations remain substantial. Continued reliance on high-cost funding could further increase financial pressure on the sector.