Sky-high apartment prices make it increasingly difficult for the poor to afford them.

Apartment prices in big cities have been increasing continuously in recent times, far exceeding the income of the majority of people.

House prices are increasingly outpacing incomes.

The third quarter 2023 report of batdongsan.com.vn shows that, in the long period from 2015 to present, the apartment price increase index in Hanoi and Ho Chi Minh City has exceeded the income growth rate of people. 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 in general, those living in Hanoi and those from other provinces who want to own a house in Hanoi longer and more difficult,” said Ms. Hang.

Ms. Hang also said that according to the survey, the demand for housing in Hanoi will remain high due to the increasing migration rate, along with population growth and high urbanization rate. It is forecasted that from 2023 to 2025, Hanoi will have 157 thousand more households. However, the future housing supply will only include 59 thousand apartments of all types, 9 thousand low-rise houses and 18.7 thousand social houses expected to be opened for sale. The shortage is about more than 70 thousand houses.

Dr. Le Xuan Nghia, a finance and banking expert, also cited evidence of the gap between housing prices and people's income.

Specifically, a worker aged 30 or younger with an average income of about 15 million VND/month, minus living expenses in big cities like Ho Chi Minh City or Hanoi, has about 6 million VND left, so it would take at least 20 years to save 1.5 billion VND.

With an income of 20-30 million VND/month, to buy a 1.5 billion VND apartment, you have to save for 10-15 years. However, the problem is that even if you have 1.5 billion VND right now, you cannot find any apartment project in Hanoi or Ho Chi Minh City with such a price.

According to the information channel Batdongsan.com.vn, the average selling price of all types of housing in Hanoi is 22.8 billion VND/unit for townhouses; 17.8 billion VND/unit for villas; 6.3 billion VND/unit for private houses and 3.1 billion VND/unit for apartments.

It is estimated that the average income of workers in Hanoi in 2023 is 135 million VND/year. Thus, to own a house on the street in Hanoi, people need to "work hard" for 169 years, to own a private house, it takes 132 years, and to buy an apartment, it takes 23 years (assuming that workers use all their income to buy a house).

These data show that settling down in big cities like Hanoi and Ho Chi Minh City is extremely difficult. Faced with the difficulty of rising housing prices, according to experts, many people have accepted to rent instead of buying a house.

Mr. Le Bao Long, Strategy Director of Batdongsan.com.vn commented: “Buying an apartment is becoming increasingly difficult for people when the rate of income growth cannot keep up with the rate of housing price growth. In the future, primary apartment projects will also have high prices because investors have to optimize profits when costs are pushed up. According to Batdongsan.com.vn's report on real estate consumer psychology, in the context of high housing prices, people are switching to renting or looking for ways to borrow to buy a house.”

Mr. Dinh Minh Tuan - Director of Batdongsan.com.vn in the Southern region also said that price is the biggest barrier for buyers at the present time because low-rise real estate types have prices much higher than the average income of people and products with high value are difficult to borrow to buy.

The average selling price of townhouses in the third quarter of 2023 is 333 million VND/m2 in Hanoi, and 209 million VND/m2 in Ho Chi Minh City.

How to reduce house prices?

According to experts, the best way to lower housing prices today is to increase supply.

To do this, according to Mr. Le Hoang Chau - Chairman of the Ho Chi Minh City Real Estate Association (HoREA), two important steps need to be taken. The first is to remove legal obstacles related to the projects to ensure that these projects can be implemented and built.

Second, it is necessary to solve the credit "problem" and stimulate cash flow by promoting policies aimed at people with real housing needs and helping businesses develop projects that meet this need.

The most important issue is to solve the difficulties in building social housing and affordable commercial housing, thereby increasing supply. Because currently, middle-income people who want to buy a house do not have a place to buy due to insufficient supply, while the supply of high-end housing is in excess.

According to Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan.com.vn, it is necessary to promote the construction and upgrading of the public transport system, including metro lines. Convenient transportation will encourage people to move out of the central area, reducing the pressure on housing demand in the inner city. In addition, apartment prices will be adjusted and stagnant in the near future because it is difficult to increase prices forever.

Sharing the same view, Mr. Le Huu Nghia, General Director of Le Thanh Construction - Trading Company Limited, also said that housing prices depend on investors' wishes and the expected profit level offered by investors.

In addition, real estate prices depend on real estate policies and laws. If policies are quick, they will greatly contribute to boosting supply. When supply exceeds demand, the market will self-regulate, helping to immediately reduce real estate prices.

"Fast legal procedures will help investors reduce construction time, from 5 years to 3 years, which will help reduce additional costs, thereby reducing real estate prices," said Mr. Nghia.