Owning a home in Viet Nam's two largest cities, Ho Chi Minh City and Hanoi, is reportedly more difficult than in Singapore. According to CBRE's latest report cited by VN Express, both cities are among Asia's least affordable cities for homebuyers.
This is mainly due to the wide gap between property prices and per capita income. In Hanoi, the average apartment price reaches US$2,600 per square meter, while the average annual income is only US$6,300, resulting in an affordability ratio of 2.4.
In Ho Chi Minh City, the figures are even higher, with an average housing price of US$2,800 per square meter and an annual income of US$7,500, resulting in an affordability ratio of 2.7.
For comparison, a higher affordability ratio indicates easier home ownership, while a lower ratio indicates greater difficulty.
CBRE points out that while property prices in Viet Nam are comparable to other Asian countries, low incomes make home ownership increasingly unaffordable.
Will Home Ownership in Viet Nam be an Impossible Dream?
The challenge of owning a home in Viet Nam has been highlighted by various studies. According to a report by Batdongsan, Hanoi and Ho Chi Minh City are among the least affordable housing markets in Southeast Asia.
It is estimated that a resident of Hanoi would need 50 years of income to buy a house and 23 years to buy an apartment. In Ho Chi Minh City, these figures are even higher, at 53 years for a house and 24 years for an apartment.
Meanwhile, the International Monetary Fund considers housing affordable if it does not exceed 30 years of household income.
Apartment prices in both cities now range from VND40-70 million (US$1,600-2,800) per square meter, meaning a 60-square-meter unit can cost between VND2.5 billion and VND3.5 billion, according to the Viet Nam Real Estate Association (VARS).
Even for the top 20% of earners (earning VND13-20 million per month), owning a home remains a significant challenge, while it is nearly impossible for low-income groups.
The continuing rise in real estate prices only exacerbates the situation. According to a report by the Ministry of Construction, housing prices will increase by 40-50% in Hanoi and 20-30% in Ho Chi Minh City in 2024 compared to 2023, with even higher increases in some projects.
Meanwhile, a survey by the HCMC Institute for Development Studies shows that the majority of the city's residents can only afford to buy half of the property they want.
Foreign Buyers Push Up Hanoi Property Prices
Rising property prices in Viet Nam are being driven not only by the limited purchasing power of the local population, but also by increasing demand from foreign buyers, particularly in Hanoi. The city is becoming increasingly attractive to foreign workers, especially skilled professionals, with around 10,000 new work permits being issued each year.
This influx of workers is in line with Viet Nam's economic growth and influx of foreign direct investment (FDI), which is driving demand for high-end real estate. According to VARS, Hanoi has now become one of the top markets for foreign buyers.
This trend will be further strengthened by the introduction of the 2023 Housing Law on August 1, 2024, which will facilitate property ownership for foreigners. The law allows them to own property for up to 50 years, with an option to extend, encouraging more foreigners to consider long-term investment in Viet Nam's real estate sector.
