Ms. Giang Huynh, Deputy Director of Market Research and S22M (Strategic Consulting for Data Science Application) of Savills Vietnam, has just commented on why young people living in Ho Chi Minh City find it difficult to buy a house despite the huge demand.
According to Ms. Giang, Ho Chi Minh City is becoming a destination for a large number of young people in the group of qualified workers from many provinces and cities across the country. With a population of more than 10 million people, Ho Chi Minh City has about 55% of the population in the young age group and 30% of them have the need to buy a house.
Young generation finds it difficult to buy a house due to lack of low-cost housing supply
Also among them, people aged 25 to 35 are considered to have good income to buy a house. For this age group, owning a house requires a certain income and balance to be able to make a down payment. In Ho Chi Minh City, this group of customers often targets small apartments with an area of 50-70m2 in suburban areas.
Without financial support from their families, young people need a minimum monthly income of 30-45 million VND to be able to save and borrow more from the bank to buy a house.
Although this is a potential market, the supply of this segment is currently not much. The market share of apartments from 2 to 3 billion VND in Ho Chi Minh City is very small, accounting for less than 20% of the current supply market share and mainly concentrated in suburban areas. This leads to limited choices for buyers.
The price is also high, not at a level that is easy to consider. Ms. Giang Huynh assessed that the imbalance between supply and demand makes it difficult to buy a suitable housing product in terms of location, area and price.
With the current situation, young people will have a lot of difficulty in finding suitable housing options. At the same time, the cost of living in Ho Chi Minh City is increasing while income is not increasing. This makes it more difficult to save up income to be able to pay high prices.
To address this issue, intervention by real estate developers, the Government and other stakeholders is needed to increase the supply of affordable housing, while addressing the issue of location and size.
In addition, the biggest bottleneck for the current housing market is the lack of approval procedures, leading to legal bottlenecks, preventing investors from implementing new projects... Current products on the market, including investment and rental, are mostly in the mid- to high-end segment with demand not being met by the majority.
In addition, the market is currently quiet and lacking liquidity, people will have the choice to invest in real estate, stocks or other investment channels...
Savills notes that for the C-class housing segment (affordable housing) targeting middle-income earners and young people, sales are still taking place but unevenly. High absorption rates are mainly occurring in projects with affordable prices and located far from the city center. This shows that demand in this segment is still strong and potential. The majority of customers in these projects are first-time home buyers.
Ms. Giang Huynh believes that the most important thing right now is to bring the market back to a state of balance between supply and demand. Data from Savills shows that this can only happen from 2024 onwards, when some projects in the affordable housing segment start operating again. The biggest bottleneck in the market right now is the project's legal issues. Once that bottleneck is resolved, the real estate market will gradually recover and return to operation.
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