According to PropertyGuru's Consumer Sentiment Trends (CSS) report, in the second half of 2023, there were three common reasons why many people wanted to rent. These were: "prioritizing flexibility" (38%), "not wanting to buy a house because the price is not reasonable" (29%), and "not having enough money to buy a house" (26%).
However, in the first half of 2024, "not having enough money to buy a house" became the leading reason, accounting for 33%.
Thus, it can be seen that the trend of renting due to financial constraints will increase in the first half of 2024. Among these, apartments are the most sought-after type of property by renters (43%), followed by private houses (18%) and boarding houses (18%). Only a small percentage (9%) are interested in renting townhouses.
In the first half of 2024, consumers will prefer renting homes. (Illustrative image)
However, according to Mr. Le Bao Long, Director of Strategy at PropertyGuru Vietnam, most Vietnamese people are only willing to spend 10-30% of their income on rent each month.
He analyzed: " Currently, the average rental price for a room in Hanoi and Ho Chi Minh City is 3.5 and 4.8 million VND respectively, while the average rental price for an apartment in these two cities is 12.5 - 13 million VND. This means that for an individual/household to afford rent, their total monthly income must be 15 - 20 million VND if they choose a room and 30 - 40 million VND if they rent an apartment."
This is not a low income for the majority of Vietnamese people. Therefore, the persistently high rental prices are a major obstacle for residents."
Mr. Le Bao Long added that, to overcome financial difficulties, tenants are proactively looking for properties with smaller areas or located further from the city center.
Specifically, according to the CSS report for the first half of 2024, when asked about their adaptation plans to high rental prices, 67% of real estate consumers planned to rent a smaller home, 27% would rent further away, 20% said they would live with more people, and 13% would rent a place with fewer amenities.
Amidst renters trying to tighten their budgets and hoping for more reasonable prices, 70% of landlords are also willing to lower rents, with common reductions of less than 10%.
Housing prices are getting more expensive.
Housing prices, especially for apartments, have risen sharply in recent years, exceeding the affordability of many people.
PropertyGuru Vietnam's Q3 2023 report shows that, over the long term from 2015 to the present, the increase in apartment prices in Hanoi and Ho Chi Minh City has outpaced the increase in people's income. After 8 years, apartment prices in Ho Chi Minh City and Hanoi increased by 82% and 56% respectively, while the income of urban residents only increased by 39%.
According to Ms. Do Thu Hang, Senior Director of Consulting and Research at Savills Hanoi: Hanoi is striving to achieve an average per capita income of 150 million VND/person/year in 2023. Compared to 2019, the average income growth rate is 6%/year. Meanwhile, the growth rate of apartment prices from 2019 to the first half of 2023 is 13%/year.
Thus, the growth in per capita income in Hanoi is lagging behind the growth in apartment prices. Home ownership will take longer for people if this gap continues to widen.
" If these two figures don't move closer together, it will make home ownership more difficult and time-consuming for people, especially those living in Hanoi and those from other provinces who want to own a home in Hanoi ," Ms. Hang said.
Analyzing this trend, Professor Dang Hung Vo stated that the story of rising house prices despite a sluggish real estate market is not surprising, as the mid-range and high-end segments continue to dominate the sales portfolios of real estate companies. Furthermore, with the steady increase in raw material and labor costs each year, the cost of building a house will also increase accordingly.
Furthermore, a segment of people specializing in speculation, buying and selling in the secondary market, has inflated housing prices for end users many times over.
Sharing the same view, Ms. Do Thu Hang also pointed out that the reason is due to the high increase in land prices and construction costs. In addition, the need to invest in improving the quality of the product and the surrounding infrastructure and amenities within the project also leads to primary market prices, or the prices of newly launched projects, always being higher than the general market price of apartments for sale.
Chau Anh
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