Renting to increase due to lack of housing affordability in the first half of 2024

Difficult to buy a house because apartment prices are increasing

According to the real estate market report recently released by the Ministry of Construction , apartment prices continue to increase in Hanoi and Ho Chi Minh City, especially in central areas.

Specifically in Hanoi , in the fourth quarter of 2023, apartment prices increased from 3.5 to 4.1%. In Ho Chi Minh City, many projects had prices increasing from 3.6 to 4.6%. There are almost no projects in the affordable apartment segment priced under 25 million VND/m2 on the market, mainly mid-range apartments priced from 25-50 million VND/m2.

The Ministry of Construction explained that apartment prices have been continuously increasing in recent years due to the scarcity of supply in recent years, while prices of low-rise housing and some other real estate segments have decreased by 10-20% depending on location and area.

Due to the scarcity of supply, constantly increasing prices and high cost of living in big cities, many people with average incomes still have to choose to rent.

Apartment prices continue to hit new highs, making it increasingly difficult to buy a home

Mr. Dao Van Thuc - an IT employee who has lived and worked in Ho Chi Minh City for more than 5 years said that due to the difficult economic situation, the income of the couple has decreased sharply from 50 million VND/month to only about 30 million VND/month. That greatly affected the couple's decision to buy a house.

“When suitable projects had reasonable prices and our family income was high, we chose to rent to get money to invest. But after a difficult investment period, the economic situation was affected, so our income also decreased. If we wanted to buy a house, there were no suitable projects on the market. After deducting living expenses and reserves, the amount of money to buy apartments with the amenities we wanted was not enough. We had to save for many more years to have enough,” Mr. Thuc shared.

Not having a high income like Mr. Thuc's family, Ms. Trang's family with an income of nearly 20 million VND/month has rented a house in Binh Tan District (HCMC) for many years now. Although spending quite frugally, Ms. Trang's family of 3 can only save about 50 million VND/year.

With the above savings, buying an apartment in Ho Chi Minh City with the current market situation is truly out of reach. Therefore, Ms. Trang also determined that renting a house is a long-term solution, until the market really has cheap projects, suitable for people with average income like her family, then she will consider buying a house.

The number of people forced to rent houses is increasing day by day.

According to the Real Estate Consumer Sentiment and Trends Report (CSS) of Batdongsan.com.vn, in the second half of 2023, among the 3 common reasons for people wanting to rent a house, "prioritizing flexibility" accounts for the largest proportion (38%), "not wanting to buy a house because the price is not reasonable" accounts for 29% and "not enough money to buy a house" accounts for 26%.

However, in the first half of 2024, “not having enough money to buy a house” became the top reason for people to rent, accounting for 33%. The motivation to rent because of “prioritizing flexibility” decreased in proportion, to only 27%.

The number of people renting because they cannot afford to buy a house is increasing (Photo: Batdongsan.com.vn)

It can be seen that the trend of renting due to finances not allowing real estate ownership to increase in the first half of 2024. Of which, apartments are the type of real estate that most tenants are interested in (43%), followed by private houses (18%) and boarding houses (18%), only a small part (9%) is interested in townhouses for rent.

Mr. Le Bao Long - Strategy Director of Batdongsan.com.vn said that most Vietnamese people are only willing to spend 10% - 30% of their income on rent each month.

“Currently, the average rental price for a boarding house 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 a person/household to have enough money to rent a house, their total monthly income must be from 15 - 20 million VND if choosing a boarding house, and 30 - 40 million VND if renting an apartment. This is not a low income level for the majority of Vietnamese people. Therefore, the high rental price level is an obstacle for people,” Mr. Long analyzed.

Experts from Batdongsan.com.vn also added that to overcome financial difficulties, tenants proactively look for properties with smaller areas or located further from the center.

Specifically, according to the CSS Report for the first half of 2024, when asked about adaptation options when rents are high, 67% of real estate consumers plan to rent a smaller house, 27% will rent a place further away, 20% said they will live with more people, and 13% will rent a place with fewer amenities.

As most tenants are trying to tighten their budgets and expecting more reasonable prices, 70% of landlords are also willing to reduce rents, with the common reduction being less than 10%.

Source: https://www.congluan.vn/xu-huong-di-thue-vi-khong-du-tien-mua-nha-tang-trong-nua-dau-nam-2024-post282464.html