The total supply of completed apartments in Hanoi reached 201,707 units in all segments last year, while that of HCMC was 224,179 units, according to data from real estate consultancy Jones Lang LaSalle (JLL).

This means there were 17 apartments per 1,000 people, or one apartment per 59 people.

"This rate is relative low right now; we should focus on the mass housing market as this is the segment with real demand," Stephen Wyatt, country head of JLL Vietnam, said.

Xuan Pham, head of marketing at the company, said Vietnamese cities are seeing a large supply of premium and luxury apartments, and there is an imbalance between supply and actual demand.

HCMC has close to three premium apartments per 1,000 people, higher than Indonesia’s Jakarta and close to the average in Thailand’s Bangkok, Malaysia’s Kuala Lumpur and the Philippines’s Manila, she said.

This high rate of premium units have pushed prices up. In Q4 last year, the average apartment price in HCMC reached a record high $2,900 per square meter. In Hanoi, the figure was $1,501, up 3.9 percent year-on-year.

These prices are higher than the affordable rate of below $1,200 per square meter, Xuan said.

She added that Vietnam will continue to see rising demand for affordable housing as migration from the countryside to urban areas drives urban population growth. The World Bank expects Vietnam’s urban population to grow by 2.4 percent per year until 2025, the highest in Southeast Asia.

There are hundreds of million dollars waiting to be poured in Vietnam’s real estate market, and many investors from Japan, South Korea, Singapore, and China are interested in affordable housing in Vietnam.

But they face challenges of diminishing land availability, exaggerated real estate price due to population surge, and environmental degradation, Xuan said. "Land fund remains a major hurdle for most investors."

Over the next two decades, demand for affordable housing should continue to rise, as Vietnam’s population median age will be around 30, and the millennial population will be the main drivers for this segment, she said.

"This demographic is ready to pay a little extra to get mid-end perks, like better connection to the central business districts and live-play-work facilities such as schools, hospitals and parks."

Another report by real estate consultancy CBRE said affordable apartments only accounted for 2 percent of housing supply in HCMC last year while luxury apartments made up 6 percent.

No new affordable projects came to the market between March and December 2019, while the luxury segment had two, down from five in 2018, it added.

The Vietnamese government had earlier set a VND30 trillion ($1.29 billion) fund to develop affordable housing, but the line of credit was closed at the end of 2016, leaving many projects in limbo.