A recent report by the Vietnam Association of Realtors (VARS) said that housing affordability in our country has declined sharply, to the point that the group representing the 20% of the population with the highest income, as classified by the General Statistics Office, cannot buy a house, if considered according to the rule that house prices do not exceed 1/3 of income.
Specifically, the results of the 2023 population living standards survey by the General Statistics Office show that the group of 20% of the population with the highest income in Hanoi received 14.47 million VND/person/month. This figure in Da Nang was 13.8 million VND, in Ho Chi Minh City was 13.26 million VND, in Dong Nai was 13.9 million VND and in Binh Duong was 18.38 million VND.
However, when faced with current housing prices, even this group encounters many obstacles.
Assuming that each household has 2 people of working age who are in the highest income group, the average income of this group is estimated at about 30 million VND/month/household, equivalent to about 360 million VND per year.
Maximum affordability if applying the common financial rule that housing costs do not exceed 1/3 of income is about 6.7 million VND per month, equivalent to about 80 million VND per year.
Meanwhile, each commercial apartment in the above mentioned big cities has a price range of 40-70 million VND/m2, depending on the area and segment. Thus, a small apartment (about 60 m2) will cost about 2.5 - 3.5 billion VND.
House prices are too expensive, even high-income earners can hardly afford to buy them. (Illustration: Minh Duc).
If this high-income group buys a 60 m2 apartment for about 3.5 billion VND and borrows 70% of the house value (ie 2.45 billion VND) from the bank, with an interest rate of 8%/year for 20 years, the monthly installment will be about 25-27 million VND, equivalent to more than 300 million VND per year.
“ With a maximum payment of VND80 million/year, this group is almost unable to buy a house ,” VARS affirmed.
Mr. Tran Van Nghia (from Nam Dinh) said that the rapid increase in apartment prices in recent times has made his family's dream of owning a house even more difficult. Mr. Nghia and his wife have stable jobs with an income of about 35 million VND/month, saving 10-12 million VND/month.
Currently, he and his wife have saved about 1 billion VND and are considering buying an apartment in Nam Tu Liem District, Ha Dong District on installments. However, after surveying both new and old apartments, he found the prices to be high, beyond the family's financial capacity. On average, a used apartment with an area of 70m2, 2 bedrooms in Nam Tu Liem District and Ha Dong District costs around 3-4 billion VND, equivalent to about 50 million VND/m2.
“ With the money I saved, to own a used 2-bedroom apartment, I had to borrow more than 2 billion VND. But with the monthly surplus, my family sometimes does not have enough to pay the principal and interest to the bank, ” said Mr. Nghia.
Young people struggle to buy a house
Mr. Nguyen Quoc Anh - Deputy General Director of PropertyGuru Vietnam said, comparing the average salary and house price from the past to the present, it can be seen that young Vietnamese people always have difficulty buying a house. Calculations by the PropertyGuru Vietnam platform show that with the average house price and income in 2004, the 7X generation would need about 31.3 years of income to buy a 60 m2 apartment for about 600 million VND, under the condition of a mobilization interest rate of 7.4%.
After 10 years, by 2014, the 8X generation also needed 22.7 years of income to buy a similar apartment. The apartment price had increased to 1.5 billion VND, while the mobilization interest rate had decreased to 6%.
Up to now, the 9X generation needs 25.8 years of income to buy the above apartment for 3 billion VND, under the condition that the mobilization interest rate is 4.5%.
“ Although the number of years of income and interest rates have decreased over time, in general, young people of all generations still need to work hard for a long time to be able to own a house, ” Mr. Nguyen Quoc Anh assessed.
Young Vietnamese people of all generations still need to work hard for a long time to be able to buy a house on their own. (Illustration: AI)
According to Mr. Do Van Thach - CEO of Dova Land, current real estate prices are a big challenge for those with real needs. With an average income of 30 million VND/month, buying an apartment in Hanoi is almost impossible without support from other financial sources or having to accept living far from the city center.
According to Mr. Thach, to be able to own an apartment in Hanoi at the current average price, the buyer's income needs to reach at least 60 to 70 million VND/month. This is a high income level, far beyond the ability of most people.
Professor Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, warned that the rapid increase in housing prices, exceeding income from wages, not only puts pressure on social security, but also promotes real estate speculation. Speculative money often waits for prices to increase, not going into production and business, causing negative impacts on inflation and currency value.
“ Failure to curb speculation and the asymmetry between housing segments has inevitably led to the end of the tunnel for the current real estate market ,” he said.
In addition, Mr. Vo also pointed out that the real estate market plays an important role in production, business and the macro economy. This unstable market will negatively affect the entire economy as in recent years. In fact, the problem of housing suitable for people's financial capacity is a challenge not only for Vietnam. Many large cities in the world also face this pressure when the demand for housing increases due to the influx of immigrants.
Chau Anh
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