Rich people actively collect real estate, poor people work all their lives but still can't buy a house

There are many reasons why housing prices are skyrocketing.

In recent times, house prices, land prices, and apartment prices in big cities like Hanoi and Ho Chi Minh City have increased sharply, and many people even say that the increase is somewhat unreasonable.

According to a report by Savills Vietnam, after 6 years, the average price increase of apartments in Hanoi has reached 70%, equivalent to a recorded increase of 11.6%/year. Currently, the average price is about 46 million VND/m2. Meanwhile, the average apartment price in Ho Chi Minh City is 48 million VND/m2.

Illustration photo. (Source: DC)

Previously, in 2018, the average apartment price in Hanoi and Ho Chi Minh City was 27 million VND and 31 million VND/m2, respectively.

Also according to Savills' report, in the first quarter of 2024 alone, primary apartment prices in Hanoi increased by 3% compared to the previous quarter and increased by 14% compared to the same period last year, setting a record price of up to 59 million VND/m2.

Similarly, according to the latest report of the Ministry of Construction , apartment prices in Hanoi have been continuously recorded in both the primary and secondary markets. Even apartment projects that have been in use for 5-10 years, even old high-rise apartment buildings, have been pushed up quite high in price, with apartment prices in Hanoi in early 2024 increasing by about 38% compared to 2019.

Talking to reporters of the Journalist and Public Opinion Newspaper, Mr. Nguyen Trung Tuan, a real estate expert, said that there are many reasons why apartment prices in big cities have increased "shockingly" as in the recent past. However, the reasons will be divided into 3 main groups.

The first group is the “traditional” causes that have been mentioned many times, such as the shortage of supply while demand is always very high. The increase in construction material prices, labor prices, and land prices also causes housing prices to increase.

The second group is temporary causes. For example, Mr. Tuan gave an example: the "virtual" increase in house and apartment prices in the first quarter of 2024 was partly due to low interest rates.

“The interest rate for home loans is at its lowest level in 20 years, which has caused everyone to return to real estate investment. This has pushed up demand, causing apartment prices to increase,” Mr. Tuan shared.

Third, due to the scarcity of supply, many land brokers, real estate brokers, and even investors and speculators are using tricks to inflate land prices. Even some real estate businesses and investors are taking advantage of this situation to unreasonably increase product prices.

According to Mr. Tuan, if based on the law of the market, demand exceeding supply can cause goods to increase in price and real estate is also a type of goods. However, if demand is low, supply is low but the selling price still increases "skyrocketingly", this is a virtual increase and there is "interference" from land speculators.

At the recent regular press conference for the first quarter of 2024, Mr. Hoang Hai, Director of the Department of Housing and Real Estate Market Management (Ministry of Construction), revealed that the Ministry had inspected a number of apartment locations advertised at high prices in Hanoi but there were not many transactions, and very few successful transactions.

Thus, it can be affirmed that the recent increase in apartment and housing prices is more "virtual" than "real".

Rich people actively collect real estate, poor people work all their lives but cannot buy a house.

With the current skyrocketing price increase, the dream of buying a house in the city for many people is gradually becoming more distant.

In a recent report by a statistics unit, the average house price in Vietnam in 2024 is nearly 24 times the average annual household income.

According to Savills' report, in Ho Chi Minh City, apartment prices are currently about 30 times higher than the average income of city residents.

Specifically, the average income of a household in Ho Chi Minh City is only about 15 million VND/month. While the average price of an apartment in a new project is currently 5.5 - 6 billion VND.

Rich people actively accumulate real estate, poor people work their whole lives but cannot buy a house. (Photo: MH)

If people are able to save 40-50%/month, it will take them several decades to be able to buy a house, in case they do not use credit or do not have support from relatives.

Ms. Giang Huynh, Deputy Director of Research and S22M, Savills HCMC said: “It will be very difficult for a household based on pure income, average income to buy a house in HCMC at this time. You must have a fairly high income, as well as support from financial leverage to be able to buy an average apartment”.

Many studies have also shown that over the years, the growth rate of housing prices is much higher than the growth rate of people's income. According to a report by Savills Vietnam, Hanoi is striving to have an average income per capita of 150 million VND/person/year in 2023, compared to 2019, the average income growth rate is 6%/year.

Meanwhile, apartment price growth from 2019 to the first half of 2023 is up to 13%/year.

“This figure shows that the growth in per capita income in Hanoi is nearly half lower than the growth in apartment prices,” said Ms. Do Thu Hang, Senior Director, Consulting and Research Department, Savills Hanoi.

Ms. Hang warned that home ownership will become even more difficult if this gap widens.

According to Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, with an affordable apartment priced at 2-3 billion VND, a person with a low-average income, with savings of about 100 million VND/year, would need about 25 years to be able to buy a house.

However, in a recent survey by One Housing, about 53% of customers surveyed are in need of buying real estate, an increase of 17% compared to the third quarter of 2023. Most of this customer group has a high middle-class income and is wealthy. And up to 50% of customers plan to buy real estate in the next 1 year.

This shows that the rich do not consider real estate and apartments as “homes” but rather as investment channels and they are actively investing. Meanwhile, for those with real needs, the dream of buying a house is still far away.

Source: https://www.congluan.vn/nguoi-giau-tich-cuc-gom-bat-dong-san-nguoi-ngheo-lam-ca-doi-chua-chac-da-mua-duoc-nha-post293688.html