Prices keep rising
Despite the general difficult context of the entire real estate market, apartment prices have continuously increased in recent years. Accordingly, while the real estate market has just "stumbled" to "test the bottom" in the last months of 2023, the real estate segment serving real housing needs, especially the apartment type, has recovered, caught the growth wave again, and even maintained the growth momentum throughout the difficult market period.
Specifically, research data from the Vietnam Association of Realtors (VARS) shows that in recent years, apartment prices have grown by double digits on average each year. In 2023 alone, the apartment price index in Hanoi at the end of 2023 increased by 16 percentage points compared to the beginning of the year.
Apartments in the affordable and mid-range segments have been steadily increasing in price over the years.
Meanwhile, this index in Ho Chi Minh City has also entered a growth cycle again since the third quarter of 2023, thanks to the gradual decline in prices in high-end and luxury projects in the secondary market. The average primary selling price of apartments nationwide is also high when the new supply to the market is mostly products priced above 40 million VND/m2, with almost no projects in the affordable apartment segment.
Apartment projects in cities are constantly setting new price levels, and rental prices for old and new apartments in residential areas are still increasing. Especially since mid-2022, when rental contracts during the peak of the pandemic - expire and are renewed if both parties continue to have demand. Many apartments have increased in price by up to 40% compared to the peak of the pandemic and increased by about 20% compared to mid-2022.
According to information from VARS, apartment rental prices in Hanoi have increased relatively strongly in recent years, especially in the studio type (1-bedroom apartments) with profit margins up to twice as high as those of larger apartments.
Specifically, in Long Bien district, studio apartments are being rented at a price of 7-8 million VND/month, an increase of 10-15% compared to the same period last year and about 30-40% compared to 2022. 2-bedroom apartments, fully furnished, have a higher price, with a lower increase of about 10% compared to the same period, up to about 10-11 million VND/month.
At the Greenbay Me Tri project (Nam Tu Liem), fully furnished studio apartments are currently being offered for rent at around VND10 million, while two-bedroom apartments range from VND14-16 million, up about 15% over the same period. Rental prices for apartments in other districts have also recorded similar increases.
Similarly, in Ho Chi Minh City, apartment rental prices have also started to increase slightly in recent times, especially in the inner city, commonly from 500 thousand to 1 million VND/month. Although before that, in mid-2023, apartment rental prices in Ho Chi Minh City remained the same, even slightly decreased in some large apartments after the "step" of sharp increase in rental prices at the end of the pandemic.
For example, the rental price of a one-bedroom apartment at Vinhomes Golden River in District 1 increased from VND15 million/month to VND20 million/month when the old contract expired. The new price was announced by the landlord and immediately found a tenant. Projects far from the center such as Sunrise Riverside, New Saigon (Nha Be district) also increased the rental price of apartments with a massive increase in tenant demand.
VARS forecasts that apartment prices are expected to continue their upward trend, around 10% for at least another year, when there is more supply of affordable housing.
Many young people choose to rent a house.
Renting is the choice of many families, when high apartment prices make home ownership increasingly difficult for the majority of people. Although loan interest rates, including home loans, have decreased.
However, borrowing to buy a house and paying monthly debt is still a burden for many families when people are not really confident about their future jobs and income due to the volatile economic situation. Renting houses will continue to increase strongly, thanks to the large increase in the number of foreign experts coming to Vietnam through FDI projects.
With a stable income, the young generation can choose to buy apartments with reasonable and safe installment policies. (Illustration photo)
Especially in the context of many changes in consumer trends. When the Millennial-Z generation, accounting for 47% of Vietnam's population, focuses more on lifestyle, living environment, and utility systems to improve the quality of life.
They will mostly choose to live in apartments with full amenities and a better living environment - something that land with similar prices cannot provide. Renting a house is also a priority choice for this generation.
Rental demand is still on an upward trend while available supply is in short supply due to the continuous decline in housing supply, especially apartments, causing rental prices to increase. VARS data shows that the supply of new apartments in all segments in the first half of 2022 reached over 22,700 units, less than half compared to the same period in 2021. More than half of the apartments being traded (bought, sold, rented) on the market are apartments from previously offered projects.
The time when investing in apartments is a "consumer asset" is over
According to VARS, the continuous increase in apartment buying, selling and renting prices in recent times has also broken the stereotype that apartment investment is a "consumer asset".
In the past, most people thought that apartments were a type of unprofitable trading, only losing money, and choosing to invest in residential land, having a piece of land to settle down was the optimal solution because of its easy liquidity and high profitability. Nowadays, investing in apartments and then renting them out has become a popular trend in big cities because it not only brings in a steady cash flow from monthly rentals - higher than savings, but also benefits from the possibility of price increases.
VARS forecasts that rental prices will continue to increase but at a slower pace. The outlook for the apartment market is becoming clearer as production and business activities are gradually recovering, leading to a large demand for housing in major cities.
Faced with the challenge of rising apartment rental prices, those in need of long-term rentals need to make appropriate decisions. With a stable income, the younger generation can choose to buy apartments with reasonable and safe installment policies.
More specifically, in the market today, some large investors have begun to launch policies to help young people buy houses with installment payments equivalent to the rental fee. With a commitment to a maximum interest rate ceiling, home buyers will avoid the "risks" associated with floating interest rates.
N.Giang
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