Wages increase, housing prices also increase, tenants are fed up with their place to live

1001 reasons to increase rental prices

Following the announcement of a salary increase, Mr. Le Manh Quoc (25 years old, from Thanh Hoa) received a notice from his landlord that his rent would increase starting July 1, 2024. The apartment Mr. Quoc currently rents for 6.5 million VND per month, paid every three months, will see the rent increase to 7 million VND per month, with the reason given being "the rent increases because of the salary increase."

As an office worker, Quoc is currently renting an apartment in a collective housing complex located on Nguyen Huy Tuong Street, Thanh Xuan District, Hanoi . In addition to the rent, Quoc needs to pay an additional 2 million VND per month for electricity, water, and service fees.

Despite the rising house prices, Mr. Quoc said he still felt lucky that his landlord didn't raise the price too much; the current price, divided among his family of five, is very reasonable. Another reason is that when he looked around nearby areas, he found that house prices had already skyrocketed, making it very difficult to find a similar apartment at such a "reasonable" price.

Unlike Quoc, Nhu Quynh (23 years old, Hai Duong ) received a notice from her landlord on June 25th that she had to move out starting July 1st, because the apartment she was living in had been temporarily suspended due to not meeting fire safety requirements after a local inspection.

With time running out, Ms. Quynh was shocked to find out that house prices had increased significantly in just a few summer months when she started looking for a home.

The most common reason Ms. Quynh receives from landlords and brokers is that the number of apartments meeting fire safety requirements for rental permits is currently limited. Furthermore, apartments that do meet the requirements have to incur additional costs for equipping them with fire safety equipment according to regulations, and this cost is added to the rent, driving up property prices.

Inside a closed apartment in My Dinh that is being rented for 4.5 million VND/month.

There were apartments she was still considering, but the next day when she called, someone else had already put down a deposit to rent them. So, Ms. Quynh had to immediately finalize a mini-apartment in My Dinh, Hanoi, at a price of 4.5 million VND/month. The apartment has basic furnishings, enough for two people with a living room, kitchen, bedroom, and a private bathroom.

In addition to the rent, every month Ms. Quynh also has to pay for electricity at 4,000 VND/kWh and water at 100,000 VND/person, not to mention service fees such as cleaning, internet, management...

Similarly, Ms. Nguyen Thi Thu Huyen (28 years old, Hoa Binh) also had her landlord add a bed, wardrobe and build an emergency escape ladder in the apartment she is living in.

Thinking she would get more benefits, right when the contract expired at the end of the month, Ms. Huyen received a notice from the landlord about an increase of 1 million VND/month in rent. The reason given by the landlord was that the apartment now had additional amenities and "the market price is like that now".

While income hasn't increased, and is even trending downwards due to the recession, Ms. Huyen said she's now in a difficult situation, unable to stay and unable to leave because it's very hard to find an affordable apartment at this time. Not to mention, moving now takes a lot of time and money, so she has to reluctantly accept the price increase.

Rental prices continue to rise

Mr. Nguyen Duc My (58 years old, Hanoi), owner of a row of boarding houses in Dinh Cong, Hoang Mai, Hanoi, confided that boarding houses have increased in price based on the rising demand of the market and the increase in apartment rental prices.

Especially after the recent inspection, his family had to spend a lot of money to upgrade services and utilities to ensure the safety of the rental room, so the rent had to increase to compensate for the above costs.

Most real estate brokers operating in the rental sector told Nguoi Dua Tin that rental prices will continue to increase steadily in all segments following the upward trend of real estate prices in the buying and selling market.

In particular, the 25-30m2, closed rooms in central districts will have the strongest price increase due to high demand and abundant guests.

The rental housing market is extremely vibrant.

Mr. Tran Hoang Nghia (26 years old, Hanoi) is currently a broker for four rental properties located in Linh Dam, Le Thanh Nghi, Chua Lang, and My Dinh, all areas near universities where the majority of tenants are students. Mr. Nghia stated that starting in August 2024, the prices of these apartments will continue to increase by approximately 10% because "the peak season has arrived."

"When students come to study, the rooms will definitely be full. At that time, we're only afraid of not having houses to rent, not of not having tenants," Mr. Nghia affirmed.

According to Nguoi Dua Tin , the current price of self-contained apartments in central Hanoi ranges from 2-4 million VND per unit for 1-2 people, without furniture. Mini-apartment units cost from 4.5-7 million VND (unfurnished), while larger apartments with 2-3 bedrooms cost from 12-18 million VND, including some basic furnishings.

Boarding houses with rental prices under 2 million VND/unit are almost extinct in the central area boarding house market. Moving to the suburbs, although boarding house prices are somewhat more "affordable", the difference is insignificant, only a few hundred thousand compared to inner city areas.

What is the reason for the price increase regardless?

VARS research data shows that apartment rental prices in Hanoi have increased relatively strongly in recent years, especially in the studio type (1-bedroom apartments) with profit margins up to twice as high as those of larger apartments.

Specifically, in Long Bien district, studio apartments are being rented for 7-8 million VND/month, an increase of 10-15% compared to the same period last year and about 30-40% compared to 2022. Fully furnished two-bedroom apartments are priced higher, with a lower increase of about 10% compared to the same period, reaching approximately 10-11 million VND/month.

At the Greenbay Me Tri project (Nam Tu Liem), fully furnished studio apartments are currently being offered for rent at around VND10 million, while two-bedroom apartments range from VND14-16 million, an increase of more than 15% over the same period. Rental apartment prices in other districts have also recorded similar increases.

Statistics from the Batdongsan website in the first quarter of 2024 show that the rental apartment market in Hanoi has been increasing sharply in price recently. In particular, the rental price of Hanoi apartments in Nam Tu Liem district increased by 8%, Cau Giay increased by 7%, Tay Ho increased by 7%, Bac Tu Liem increased by 8%.

VARS Chairman said that people's demand for housing is still on the rise.

According to VARS Chairman Nguyen Van Dinh, renting a house is the choice of many families, as high apartment prices make home ownership increasingly difficult for the majority of people.

In particular, home loans and monthly debt repayments remain a burden for many families as people are not really confident in their future jobs and incomes due to the volatile economic situation.

Therefore, “Rental demand is still on an upward trend while available supply is lacking due to the continuous decline in housing supply, especially apartments, causing rental prices to increase,” Mr. Dinh affirmed.

Mr. Dinh also forecasted that rental prices will continue to increase but at a slower pace. The outlook for the apartment rental market is becoming clearer as production and business activities are gradually recovering, leading to a large demand for housing in large cities.

To solve the above situation, Mr. Dinh said that the core problem is still to solve the problem of apartment supply to have a place to live for a large group of people who are in need of owning a house, thereby reducing the burden on the rental housing segment, from which we can gradually bring rental housing prices to a stable level .

Source: https://www.nguoiduatin.vn/luong-tang-gia-nha-cung-tang-nguoi-thue-ngan-ngam-vi-chon-an-cu-a671137.html