Landlords are competing to raise apartment rental prices, leaving tenants worried.

Ms. Do Thu Lien (from Hai Duong province ) said that she and her husband have been renting an apartment in the Duong Noi new urban area, Ha Dong district (Hanoi) for over a year. The apartment is about 60 square meters and costs 7 million VND per month. The contract is for 12 months. At the beginning of this year, the lease expired, and when signing a new contract, Ms. Lien was worried because the landlord announced that the rent would increase from the beginning of March, by 500,000 VND each month.

" I have two young children in elementary school, and my husband and I only earn enough to cover their education and basic daily expenses. Now that rent has increased, I feel immense pressure right from the beginning of the year. So, our previous worries about rising rent prices have come true ," said Ms. Lien.

According to Ms. Lien, to avoid the landlord constantly demanding rent increases, during this contract signing, she tried to negotiate with the landlord to extend the contract term to two years at a time, and on the condition that she pay rent every three months, instead of monthly as she currently does.

Many landlords are increasing the rental prices of their apartments. (Illustrative image: batdongsan.com).

Similarly, Mr. and Mrs. Tran Tien Hung (from Ha Nam province), who rent an apartment in the Thanh Pho Giao Luu urban area (Bac Tu Liem district), also said that two years ago, the initial rent was 7.5 million VND for a 70 m2 apartment, fully furnished, meaning tenants "only need to bring their suitcases and move in". However, at the beginning of this year, when it came time to renew their contract, the landlord announced an increase of 1 million VND to "match the general market rate".

Mr. and Mrs. Hung had no choice but to accept the situation because they were used to living there, and he had also inquired in many places, but everywhere was expensive. " This year the economy is difficult, everything is more expensive, but our income remains the same, and sometimes even decreases. The rent is a real burden for my wife and me. Buying a house at this time is also difficult, so we have to find ways to make ends meet, " Mr. Hung shared.

In its recent market report, Savills stated that rental prices for all categories of serviced apartments in the two major cities of Hanoi and Ho Chi Minh City increased year-on-year in 2023.

In Ho Chi Minh City, the highest increase was in class C with 8%, followed by class B at 5% and class A at 3%. The average rental price for serviced apartments reached VND 516,000 per square meter per month, a 3% year-on-year increase.

In Hanoi, the average rental price for serviced apartments in 2023 reached VND 580,000 per square meter per month, a 1% increase year-on-year. The occupancy rate reached 83%, with Class A apartments showing the largest growth at 4% quarter-on-quarter.

According to PropertyGuru's Consumer Sentiment Trends (CSS) report, rising home prices and a challenging economic situation are predicting an increase in rental demand in the first half of 2024.

Of these, apartments are the type of property that tenants are most interested in (43%), followed by private houses (18%) and boarding houses (18%). Only a small percentage (9%) are interested in renting townhouses.

Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, also analyzed that many customers do not have enough money to buy a house, so they will rent instead, or some groups will rent and then sublet to serve domestic tourism.

On the other hand, the increasing trend of urbanization and the influx of migrants to the city center have led to a surge in demand for apartments and rental housing; the rental market has become more vibrant than before.

" High demand will lead to higher rental prices. If the scarcity of new project supply continues, causing house prices to rise, people will tend to wait and see, shifting from buying to renting more often ," Mr. Dinh said.

According to Mr. Le Bao Long, Director of Strategy at PropertyGuru Vietnam, for investors with a long-term vision, rental apartments remain an attractive investment channel due to their high average return on investment (combining price appreciation over time and rental income), around 12.5% per year. This is a better and more stable return compared to many other investment channels such as stocks, gold, foreign currency, land, and savings accounts.

“ Access to apartments is becoming increasingly difficult as income growth lags behind rising housing prices. In the future, primary apartment projects will have high price levels because developers must maximize profits as costs increase, which partly explains the current trend of many young families renting, ” Mr. Long analyzed.

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