Landlords compete to increase apartment rental prices, customers are worried

Ms. Do Thu Lien (from Hai Duong) said that she and her husband have rented an apartment in the new urban area of Duong Noi, Ha Dong district (Hanoi) for more than a year now. The apartment is about 60 square meters, with a rental price of 7 million VND/month. The contract was signed for 12 months. At the beginning of this year, the rental contract expired, when signing a new contract, Ms. Lien was worried because the landlord announced that the rent would increase from the beginning of March, by 500,000 VND/month.

" I have two children in primary school. My husband and I's income is just enough to cover our children's education and basic daily expenses. Now that the rent has increased, I've felt a lot of pressure since the beginning of the year. So our previous worries about the increase in rent have come true ," said Ms. Lien.

According to Ms. Lien, to avoid the landlord asking for continuous price increases, in this contract signing, she tried to negotiate with the landlord to increase the contract term to 2 years/time and the condition is that she must pay the rent 3 months/time, instead of paying monthly as at present.

Many landlords increase rental prices of apartments. (Illustration: batdongsan.com).

Similarly, Mr. Tran Tien Hung (from Ha Nam) and his wife, who rent a house in the Thanh Pho Giao Luu urban area (Bac Tu Liem district), also said that 2 years ago, the initial rental price was 7.5 million VND for a 70 m2 apartment, fully furnished, and the customer "just needs to bring a suitcase and move in". However, at the beginning of this year, when it was time to renew the new contract, the landlord announced an increase of 1 million VND to "match the general level".

Mr. Hung and his wife had to accept it because they were used to living here and he also took the trouble to ask around but everywhere was expensive. " This year the economy is difficult, everything is increasing but the income is only the same, sometimes even decreasing. The rent is really a burden for my wife and I. It's difficult to buy a house at this time so we have to find a way to make ends meet, " Mr. Hung shared.

In a recent market report, Savills said that rental prices for all serviced apartment classes in the two major cities of Hanoi and Ho Chi Minh City in 2023 will increase year-on-year.

In Ho Chi Minh City, the highest increase was in class C at 8%, followed by class B at 5% and class A at 3%. The average rental price for serviced apartments reached VND516,000 per square meter per month, up 3% year-on-year.

In Hanoi, serviced apartment rental prices in 2023 reached VND580,000 per square meter per month, up 1% year-on-year. Occupancy rate reached 83%, of which Grade A had the largest growth of 4% quarter-on-quarter.

According to PropertyGuru's report on real estate consumer trends and sentiment (CSS), rising house prices and a difficult economic situation are expected to increase the rental trend in the first half of 2024.

Of these, 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 portion (9%) are interested in townhouses for rent.

Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, also analyzed that many customers do not have enough money to buy a house, so they will rent or some groups will rent and then sublet to serve domestic tourism.

On the other hand, the increasing trend of urbanization and the large number of immigrants to the city center have led to an increase in the demand for renting apartments and boarding houses; the rental market has become more vibrant than before.

“ High demand will lead to increased rental prices. If the supply of new projects remains scarce, causing home prices to increase, people will tend to wait and see, switching from buying to renting more, ” said Mr. Dinh.

Mr. Le Bao Long, Strategic Director of PropertyGuru Vietnam, commented that for investors with a long-term vision, apartments for rent are still an attractive investment channel because of their high average profit rate (combined price increase over time and rental profit), around 12.5%/year. This is a better and more stable profit rate compared to many other investment channels such as stocks, gold, foreign currency, land, savings, etc.

“ Access to apartments is becoming increasingly difficult as income growth cannot keep up with housing price growth. In the future, primary apartment projects will have high prices because investors have to optimize profits when costs are pushed up, which partly explains the current trend of many young families renting houses ,” Mr. Long analyzed.

Chau Anh

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