(CLO) The Vietnam Association of Realtors (VARs) believes that people with average incomes who want to own a home are having to put their dreams on hold or look for opportunities in areas with lower costs.
House prices exceed income, dream of 'settling down' temporarily put on hold
VARs believe that many Vietnamese people today do not earn enough money to pay for a home, or pay monthly interest on a home loan. Especially in the context of the economy facing many challenges, with the risk of a trade war, making many people feel worried about the ability to increase their income.
In addition, the change in lifestyle of young people is also one of the reasons for putting aside the dream of buying a house. VARs believe that young people today tend to prioritize quality of life, through balancing work and enjoyment rather than “must own a house” despite the pressure of monthly debt payments.
VARS research data shows that the recommended minimum income to buy an average-priced house in Hanoi is about 2.3 to 10 times higher than the average household income in Hanoi.
Housing prices are 10 times higher than income, the dream of 'settling down' of many Hanoians has to be put on hold. (Photo: ST)
Specifically, according to data from the General Statistics Office, the average monthly income of workers in Hanoi in the third quarter of 2024 reached 10.7 million VND/month. Assuming a household of 4 people, of which 2 are of working age, the total household income will be about 21.4 million VND/month.
With the average primary apartment price in 2024 reaching 70 million VND/m2, newly opened projects are priced from 60 million VND/m2, to be able to buy an apartment in Hanoi, buyers need a minimum income ranging from 45 million to 210 million VND/month, depending on the area.
"The significant gap between actual average income and house prices makes home ownership in Hanoi today not only a challenge but also impossible for the vast majority of households with average or even good incomes," VARs said.
In central districts such as Hoan Kiem, Ba Dinh, Dong Da, Hai Ba Trung or Tay Ho, the gap between the minimum annual salary needed to pay the mortgage and the average household income reaches 10 figures. Meanwhile, suburban areas such as Ha Dong, Bac Tu Liem or Long Bien have more accessible prices, but are only suitable for individuals and households with incomes of 40 - 60 million/month.
VARs calculations are based on average home prices in each district and assume buyers can borrow 70% of the home's value from a bank at an average interest rate of 8% per year for 20 years.
According to financial principles, the total monthly installment should not exceed 40% of income, then the recommended minimum income to buy an average-priced house in Ha Dong, Long Bien, Nam Tu Liem, Bac Tu Liem, Gia Lam is about 2 to 3 times higher than the average household income of Hanoi workers.
In Hoan Kiem, Ba Dinh, Hai Ba Trung, Dong Da or Tay Ho districts, the minimum income required is above 1 billion VND/year, equivalent to a difference of about 3.7 to 8 times. In Cau Giay and Thanh Xuan districts, the difference is 3 to 3.5 times.
"This means that buying a house in Ha Dong, Long Bien, Nam Tu Liem, Bac Tu Liem, Gia Lam districts is more feasible for households with typical incomes, provided they are willing to "bear" the cost burden, spending more than 40% of their income on monthly installments," the VARs report stated.
Current housing prices in Hanoi are "anchored" high
VARS believes that, over the years, for many individuals and households with typical average incomes, buying a house is not only to meet housing needs but can also be a form of investment.
Because history shows that housing prices in large cities in Vietnam in general, and Hanoi in particular, over the past decade have increased on average faster than income growth, higher than other investment channels and loan interest rates.
Buying a house is not only to meet housing needs but can also be a form of investment. (Photo: ST)
However, the ability to pay for housing for middle-income people is becoming increasingly difficult as housing prices continue to increase, and newly opened projects all have high prices, from 60 million VND/m2 or more.
Depending on investment taste and lifestyle, some people will still choose to reduce living expenses, accept risks to buy a house early, accept bank loans and endure financial pressure.
Others will choose to wait or rent a house to be more flexible in finance as well as satisfy the difference in lifestyle. Because the current housing price level in Hanoi is "anchored" high, the price increase rate is difficult to maintain as in the previous period.
In particular, economic downturns can reduce homebuyers' incomes, reducing affordability or increasing debt repayment pressure for those who have borrowed money.
Bank interest rates are not fixed and at some stage, interest rate adjustments make home loans more expensive, which can make it impossible to meet the repayments.
With the current good interest rates, households with typical incomes or individuals with equivalent incomes, with at least 30% of the apartment value in cash, can still choose to take out a home loan. However, home buyers need to accept moving to lower-priced areas such as districts far from the center or satellite cities around Hanoi.
VARS believes that, with attention and focus on investing and developing a synchronous transportation network, travel between regions will become increasingly more convenient, with shorter travel times.
"This will positively contribute to helping people be more willing to choose housing in areas further from the center. However, to attract home buyers, investors need to offer more reasonable prices, suitable to the needs and affordability of people, creating home ownership opportunities for many people," VARs said.
Source: https://www.congluan.vn/gia-nha-vuot-10-lan-thu-nhap-uoc-mong-an-cu-cua-nhieu-nguoi-ha-noi-phai-gac-lai-post333602.html
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