Apartment prices in Thu Duc City, a new urban area in eastern HCMC, are at an unprecedented VND60-90 million ($2,600-3,900) per square meter in the premium segment as the creation of the new city pushes up demand.

In the affordable segment, prices have risen by 20-40 percent to VND30-35 million as the new city is expected to usher in administrative reforms and growth.

Other areas in Vietnam’s largest city have also seen prices rise this year. The ready-built landed property segment in HCMC saw average prices climb by nearly 36 percent to $5,277 per square meter in the second quarter and a new record of $5,337 in the third, and a further increase is expected in the last quarter this year, according to real estate consultancy Jones Lang LaSalle.

In Hanoi, apartment prices rose 10 percent year-on-year in the third quarter to $1,500 per square meter as developers delayed launches due to the pandemic, real estate consultancy Savills said.

GDP growth fell to a 10-year low of 2.9 percent and the number of businesses that suspended operations rose to 62 percent.

This bucked the normal trend of economic crises dragging prices down, Dang Hung Vo, a former deputy minister of natural resources and environment, pointed out.

One explanation for the counterintuitive trend, according to him, could have been the lack of supply due to legal discrepancies that delayed new developments, he said.

Difficulties in getting permits have been the main roadblock for developers. From 106 housing projects approved in 2016, the figure fell to 16 last year and 12 in the first six months of this year, the Ho Chi Minh City Real Estate Association (HoREA) said.

The number of new housing units fell 79 percent in the first half of this year compared to the same period in 2017 to 4,569, and 2020 could be the third consecutive year that new supply falls, HoREA forecast in September.

A similar trend was seen in Hanoi where Q3 new apartment supply fell 60 percent year-on-year to a five-year low of 3,100 units, Savills said.

Prices remain high despite a slump in rents. Shophouse rents in HCMC have fallen 25-40 percent from pre-pandemic levels, and apartment rents by 15-20 percent.

Phan Cong Chanh, CEO of HCMC-based real estate firm Phu Vinh Group, said since owners have not been affected too badly by the pandemic there are no distress sales, and this, combined with a supply shortage, keeps prices high.

But rents have fallen because businesses have had to scale down to survive, he added.

Nguyen Loc Hanh, CEO of HCMC-based Asia Gem Real Estate Investment Jsc, said so far the real estate market has coped with the challenges posed by the pandemic.

"But the unexpected Covid-19 blow has made the market difficult to forecast, and I believe there are still surprises ahead."