Couples with income of 30 million VND/month find it difficult to buy an apartment in Hanoi

(Dan Tri) - According to a survey by the General Statistics Office, the highest income groups in Hanoi and Ho Chi Minh City also have difficulty owning a home, which means that lower income groups have almost no chance.

The problem of buying a house for the highest income group

The 2023 Population Living Standards Survey by the General Statistics Office (GSO) announced the income levels of five population groups in major localities.

Accordingly, the group with the highest income, accounting for 20% of the population (group 5), has an average monthly income per capita of 14.47 million VND in Hanoi; 13.8 million VND in Da Nang; 13.26 million VND in Ho Chi Minh City; 13.9 million VND in Dong Nai and 18.38 million VND in Binh Duong.

The Vietnam Association of Realtors (VARS) assesses that this is a group that is expected to be able to own houses in large cities such as Hanoi or Ho Chi Minh City without needing support from the Government. However, in reality, when faced with the problem of owning houses in the two large cities mentioned above, even this group encounters many obstacles.

This unit assumes that a household with 2 people of working age, both in the highest income group, then the average income of this family is about 30 million VND/month. The annual income is equivalent to 360 million VND.

A common financial rule often advised by experts to ensure financial security is that housing expenses should not exceed 1/3 of income. Thus, a family of 2 with high income in the survey group should only spend a maximum of 180 million VND on housing expenses.

Meanwhile, each commercial apartment in the above mentioned big cities has a price ranging from 40-70 million VND/m2, depending on the area and segment. A small apartment of about 60m2 will cost about 2.5-3.5 billion VND.

If the above household decides to buy a 60m2 apartment for about 3.5 billion VND and borrows 70% of the house value from the bank, or 2.45 billion VND, with an interest rate of 8%/year for 20 years. Thus, the monthly installment will be about 25-27 million VND, equivalent to about more than 300 million VND per year. VARS concludes that with a maximum payment of 80 million VND/year, this group will almost be unable to buy a house.

An apartment building in Hanoi (Photo: Ha Phong).

Housing prices beyond people's ability to pay

Explaining the reasons for the sharp decline in housing affordability over the past few years, this unit cited three main reasons.

Firstly, real estate prices in large cities have far exceeded the financial capacity of the majority of people and increased many times faster than income growth.

Specifically, after the Covid-19 pandemic, real estate prices, especially apartments, in big cities such as Hanoi, Da Nang and Ho Chi Minh City continuously increased, setting a new level 30% higher than in 2019.

Meanwhile, the average income per capita in urban areas in 2023 increased by only about 4% compared to GSO statistics in 2019. The average income of the highest income group in Hanoi and Da Nang in 2023 increased by only 3% and 7% respectively compared to 2019.

The average income of this group in Ho Chi Minh City even recorded a negative growth rate of 8%. This makes the gap between income and housing prices wider, especially for middle-class and upper-middle-class households.

The second is the lack of suitable housing supply. The current housing supply is mainly focused on the mid-range and high-end segments and above. Although the demand in this segment is also very large, the demand for affordable housing is the main demand of the market. Very few housing projects cost less than 30 million VND/m², leaving the majority of people, even the highest group, without suitable options.

VARS also believes that some investors are taking advantage of the scarcity of market supply to unreasonably increase selling prices, causing real estate prices to rise, even in areas without many infrastructure advantages. This also makes it difficult for those who want to buy real estate.

Third, it is due to speculative behavior. In the context of other investment channels still having many fluctuations, the psychology of hoarding assets and expecting real estate prices to continue to increase has caused many people to buy real estate without the intention of actual use. These people buy real estate and then leave it abandoned, not putting it into use, waiting for the price to increase, making the imbalance between supply and demand even more serious.

In addition, another factor that is less mentioned but has a great impact is financial costs. Although interest rates have decreased, home buyers still have to pay floating interest rates after incentives of about 10% or more. This also creates a lot of financial pressure.

Financial costs, along with investment costs and land costs, are continuously increasing, affecting the project development process of real estate businesses and directly increasing housing prices.

In the long term, VARS believes that in addition to continuing to research and apply preferential policies on land, taxes and loans for social housing projects and affordable commercial housing, the State needs to continue to promote the improvement of connecting infrastructure and expand urban development according to the TOD model - an urban development model focusing on public transport. This is an inevitable trend to solve the housing problem for urban residents in Vietnam.

Source: https://dantri.com.vn/bat-dong-san/vo-chong-thu-nhap-30-trieu-dongthang-kho-long-mua-duoc-chung-cu-ha-noi-20241209111945482.htm