Customers prefer to rent houses in the first half of 2024 because they cannot afford to buy

According to PropertyGuru's Consumer Sentiment and Trends (CSS) report, in the second half of 2023, there are three common reasons why many people want to rent a house. These are: "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, accounting for 33%.

Thus, it can be seen that the trend of renting a house due to financial constraints will increase in the first half of 2024. In particular, apartments are the type of real estate that most renters are interested in (43%), followed by private houses (18%) and boarding houses (18%). Only a small number (9%) are interested in townhouses for rent.

In the first half of 2024, consumers will prefer to rent houses. (Illustration photo)

However, according to Mr. Le Bao Long, Strategic Director of PropertyGuru Vietnam, most Vietnamese people are only willing to spend 10 - 30% of their income on rent each month.

He analyzed: “ Currently, the average rental price of boarding houses in Hanoi and Ho Chi Minh City is 3.5 and 4.8 million VND respectively, while the average rental price of apartments 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, the total monthly income must be 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 is an obstacle for people."

Mr. Le Bao Long 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%.

House prices are getting more expensive

House prices, especially apartment prices, have increased sharply in recent years, beyond the affordability of many people.

PropertyGuru Vietnam's Q3/2023 report shows that, over the long period from 2015 to present, the price increase index of apartments in Hanoi and Ho Chi Minh City has exceeded the growth rate of people's income. After 8 years, apartment prices in Ho Chi Minh City and Hanoi increased by 82% and 56% respectively, while the income of people in urban areas increased by only 39%.

According to Ms. Do Thu Hang, Senior Director, Consulting and Research Department of Savills Hanoi: Hanoi is striving to have an average income per capita of 150 million/person/year in 2023. In comparison to 2019, the average income growth rate is 6%/year. Meanwhile, the growth rate of apartment prices from 2019 to the first half of 2023 is 13%/year.

Thus, the growth of per capita income in Hanoi is lower than the growth of apartment prices. Home ownership will take longer if this gap continues to widen.

“ If these two numbers do not move closer together, it will make home ownership for people, especially those living in Hanoi and those from other provinces who want to own a house in Hanoi, longer and more difficult, ” said Ms. Hang.

Analyzing this trend, according to Professor Dang Hung Vo, the story of increasing house prices despite the sluggish real estate market is not surprising when the mid-range and high-end segments continue to account for the majority of the sales basket of real estate businesses. In addition, the prices of raw materials and labor are increasing steadily every year, so the cost of building a house will also increase accordingly.

Not to mention, a group of speculators, buying and reselling in the secondary market, has caused the price of houses to reach end users to be inflated many times.

Sharing the same view, Ms. Do Thu Hang also pointed out that the reason is due to the high land prices and construction costs. In addition, the need to invest in improving the quality of products and surrounding infrastructure and utilities, internal projects also lead to primary market prices, or prices of newly launched projects always being higher than the general market level of apartments for sale.

Chau Anh

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