House prices far exceed incomes
According to data from the information channel Batdongsan.com.vn, the average selling price of different types of housing in Hanoi is currently 22.8 billion VND/unit for townhouses; 17.8 billion VND/unit for villas; 6.3 billion VND/unit for private houses and 3.1 billion VND/unit for apartments.
It is estimated that the average income of workers in Hanoi in 2023 is 135 million VND/year. Thus, to own a house on the street in Hanoi, people in the capital need to "work hard" for 169 years, to own a private house it takes 132 years, and to buy an apartment it takes 23 years (assuming that workers use all their income to buy a house).
Similarly, in Ho Chi Minh City, the average selling price of a street-front house is 25 billion VND, equivalent to 169 years of average income of workers in this city. The average price of each villa is 24 billion VND, equivalent to 162 years of income of people. The price of a private house is about 7.9 billion VND/unit, equivalent to 53 years of income. Meanwhile, apartments are sold at an average price of 3.5 billion VND/unit, nearly equal to 24 years of income. The average income of workers in Ho Chi Minh City in 2023 is estimated at about 148 million VND/year.
Real estate prices, especially villas and townhouses in Hanoi and Ho Chi Minh City, have continuously increased in recent years, far exceeding people's income (Illustration: Ha Phong).
According to Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan.com.vn, buying a house in big cities in Vietnam will become increasingly difficult. Therefore, people need to have a plan to accumulate and increase their income to buy a house soon instead of waiting for prices to drop sharply.
In addition, according to the above report, Vietnam ranks first in Southeast Asia in terms of the gap between housing prices and average income of workers. From 2018 to 2021, the gap between real estate prices and average income of Vietnamese people has continuously increased, surpassing Singapore. Meanwhile, this index in Indonesia, Malaysia and Thailand shows signs of decreasing.
"Vietnam's real estate prices will hardly decrease and the gap between housing prices and average income of people will continue to increase," Mr. Nguyen Quoc Anh predicted.
However, people's actual income may be higher than the statistics, many Vietnamese people do not live on salary alone. The Vietnam Real Estate Consumer Sentiment Report (CSS) in early 2023 by Batdongsan.com.vn reflects that 80% of survey participants own at least one property and 66% - 87% of them plan to buy a second or third property within the next year.
Major consequences
In fact, real estate prices, especially housing and land prices, are constantly increasing and are higher than people's income. This makes it more difficult for low-income workers in urban areas and industrial park workers to access and create housing.
According to statistics from many real estate market research units, affordable apartments priced at around VND25 million/m2 in commercial housing projects are almost non-existent in the central areas of Hanoi and Ho Chi Minh City. Apartments with this price are only available in a few projects in areas far from the center such as districts of the two cities above.
Low-cost housing is increasingly scarce in Hanoi (Illustration photo: Ha Phong).
Mr. Le Hoang Chau - Chairman of the Ho Chi Minh City Real Estate Association - said that the "out of phase" situation makes the real estate market develop unbalancedly and unsustainably. With the current situation, it is very difficult to reduce housing prices, the supply of social housing is limited, a series of projects are shelved, making the dream of settling down more and more distant.
Many real estate experts assess that real estate prices increasing too high compared to the income of the majority of people brings risks in the future, just one shock and the market will suffer great consequences.
Therefore, experts believe that state management agencies need to quickly implement a number of solutions, such as: Taxing land, valuing assets according to market prices to apply taxes; limiting transaction time, especially for land products, and requiring a new construction rate to be allowed for construction; increasing interest rates on abandoned land if financial leverage is used; tightening the situation of converting land use purposes, in order to prevent the situation of making profits by the trick of converting land use purposes, disrupting urban planning.
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