Even high-income earners are struggling with rising housing prices in Hanoi and Ho Chi Minh City.

With current high real estate prices, even high-income earners of 13-18 million VND/month in cities like Hanoi, Da Nang, Ho Chi Minh City, and Binh Duong find it very difficult to buy a house, despite saving diligently.

With current incomes, even the highest-income working-class households in major cities cannot afford to buy a house - Photo: B. NGOC

This assessment was made by the Vietnam Association of Real Estate Brokers (VARS) in its market research report for the first week of December 2024, which was recently published.

Saving up for a whole year only earns enough money to buy 1-2 square meters of housing.

According to the 2023 Household Living Standards Survey published by the General Statistics Office in April of this year, the average income of people in major cities such as Hanoi , Da Nang, Ho Chi Minh City, and Binh Duong is divided into five income groups.

Accordingly, in 2023, the highest average income group in Hanoi reached approximately 14.4 million VND/month, Ho Chi Minh City reached nearly 13.3 million VND/month, Dong Nai reached 13.9 million VND/month, and Binh Duong reached 18.3 million VND/month.

According to VARS, this group is expected to be able to own homes in major cities like Hanoi and Ho Chi Minh City without government support.

However, with current high housing prices, commercial apartment prices ranging from 40-70 million VND/ ^m² depending on the area and housing segment, even this high-income group finds it very difficult to buy a home.

VARS assumes that each household has two working-age individuals belonging to the highest income group, then the average income of this group is estimated at approximately 30 million VND/month/household, equivalent to about 360 million VND per year.

The maximum affordability, if applying common financial guidelines, is that housing costs should not exceed one-third of income, equivalent to approximately 80 million VND per household per year. This amount is only enough to buy 1-2 square meters of apartment in Hanoi or Ho Chi Minh City today.

Meanwhile, commercial apartments in the aforementioned major cities are commonly being offered for sale at prices ranging from 40 to 70 million VND/m², with even small apartments of around 60m² costing approximately 2.5-3.5 billion VND.

If a high-income group in this urban area decides to buy a 60m² apartment priced at approximately 3.5 billion VND, and borrows 70% of the property value from the bank (approximately 2.45 billion VND) at an interest rate of 8% per year for 20 years, the monthly installment would be around 25-27 million VND, equivalent to over 300 million VND per year.

Thus, with a maximum housing expenditure of 80 million VND per year, almost all high-income households in urban areas cannot afford to buy a house without support from relatives or the government.

The market is facing a severe shortage of affordable housing, yet rows of million-dollar villas, already owned, have been left vacant for decades - Photo: B. NGOC

The majority of people cannot afford to buy a house.

According to VARS, access to housing and the ability to secure housing for the majority of the population, especially workers, has declined sharply in recent years.

The reason is that housing prices in major cities, which have already far exceeded the financial capabilities of most people, have risen rapidly. The rate of increase in housing prices is many times higher than the rate of increase in people's income.

Another reason is the shortage of affordable housing supply, with current housing supply mainly concentrated in the mid-to-high-end segment. There are very few housing projects priced below 30 million VND/ ^m² , leaving most people, including those in group 5, without suitable housing options.

According to VARS, some developers have recently taken advantage of the market's supply shortage to unreasonably increase selling prices, causing real estate prices to rise even in areas without significant infrastructure advantages, creating difficulties for those with genuine housing needs.

One of the main factors driving up real estate prices is speculation. Amidst the volatility of other investment channels, the desire to hoard assets and the expectation of continued price increases have led many people to buy properties not for actual use.

They buy land and houses but leave them vacant, not using them, waiting for prices to rise, which exacerbates the supply-demand imbalance.

Furthermore, another less-discussed but significant factor affecting house prices is financing costs. Although interest rates have decreased, homebuyers in Vietnam still face floating interest rates of around 10% or higher after the initial preferential period. This also creates financial pressure for homebuyers.

To bring down housing prices, VARS suggests that in addition to continuing to research and apply preferential policies on land, taxes, and loans for social housing and affordable commercial housing projects, the State needs to continue promoting the improvement of connecting infrastructure and "expanding" urban development according to the TOD model - an urban development model focused on public transportation. This is an inevitable trend to solve the housing problem for urban residents in Vietnam.

If residential, commercial, and service areas are built around public transportation hubs such as trains, metros, and rapid bus systems, people will certainly be willing to move to suburban areas where businesses can develop projects with lower prices. When the supply is sufficient and appropriate, house prices will gradually adjust to their true value.

Source: https://tuoitre.vn/thu-nhap-cao-cung-lao-dao-voi-gia-nha-o-ha-noi-tp-hcm-20241209094600661.htm