Hanoi housing prices differ greatly from actual incomes

According to VARS research data, the recommended minimum income to be able to buy an average-priced house in Hanoi is about 2.3 to 10 times higher than the average household income in this city.

Specifically, VARS cited data from the General Statistics Office, the average monthly income of workers in Hanoi in the third quarter of 2024 reached 10.7 million VND/month. If a household has 4 people, of which 2 are of working age, the total household income will be about 21.4 million VND/month.

Meanwhile, the average primary apartment price in 2024 will reach VND70 million/m2, with new projects starting at VND60 million/m2. Therefore, to be able to buy an apartment in Hanoi, buyers need to have a minimum income ranging from VND45 million to VND210 million/month, depending on the area.

VARS experts say that the significant gap between actual average income and housing prices is making home ownership in Hanoi a big challenge, making it difficult for the majority of households with average or even good incomes to become a reality.

Notably, in central districts such as Hoan Kiem, Ba Dinh, Dong Da, Hai Ba Trung or Tay Ho, the gap between the minimum annual salary required to pay the mortgage and the average household income must reach 10 figures. Suburban areas such as Ha Dong, Bac Tu Liem or Long Bien have more accessible prices but are only suitable for individuals and households with incomes of 40 - 60 million/month.

VARS calculated, based on the average house price in each district and assuming that the buyer can borrow 70% of the house value from the bank with an average interest rate of 8%/year for 20 years. If calculated according to financial principles, the total monthly installment should not exceed 40% of income, the recommended minimum income to buy an average-priced house in Ha Dong, Long Bien, Nam Tu Liem, Bac Tu Liem, Gia Lam is about 2 to 3 times higher than the average household income of Hanoi workers.

In Hoan Kiem, Ba Dinh, Hai Ba Trung, Dong Da or Tay Ho districts, the minimum income required is over 1 billion VND/year, equivalent to a difference of about 3.7 to 8 times. In Cau Giay and Thanh Xuan districts, the difference is 3 to 3.5 times.

This means that buying a house in Ha Dong, Long Bien, Nam Tu Liem, Bac Tu Liem, Gia Lam districts will be more feasible for households with typical incomes, provided they are willing to “bear” the cost burden, spending more than 40% of their income on monthly installments.

For many individuals and households with typical average income, buying a house is not only to meet the need for housing but can also be a form of investment. The history of housing prices in major cities in Vietnam in general and Hanoi in particular shows that, over the past decade, average housing prices have increased faster than income growth, higher than other investment channels and loan interest rates.

Especially in 2024, housing prices, which were already high, have increased "dizzily" while incomes have not improved correspondingly, causing housing affordability in Hanoi to continuously decline in the past few years. Therefore, for people with average incomes who want to own a house, the "dream" is still very far away or they have to look for opportunities in areas with lower costs.

Housing affordability for middle-income earners is becoming increasingly difficult as housing prices continue to rise, with new projects opening for sale all having high prices, from VND60 million/m2 and up. However, depending on their “investment appetite” and lifestyle, some people will still choose to reduce living expenses, accept risks to buy a house early, accept bank loans and endure financial pressure.

Others will choose to wait or rent a house to be more flexible in finance as well as satisfy the difference in lifestyle. Because the current housing price level in Hanoi is "anchored" high, the price increase rate is difficult to maintain as in the previous period. In particular, the economic downturn can reduce home buyers' income, reducing their ability to pay or increasing debt repayment pressure for those who have borrowed money.

At the same time, bank interest rates are not fixed and in some periods, interest rate adjustments also make home loans more expensive. This can make them unable to meet the payment for installments.

With the current good interest rates, households with typical incomes or individuals with equivalent incomes, with at least 30% of the apartment value in cash, can still choose to take out a home loan. However, home buyers need to accept moving to lower-priced areas such as districts far from the center or satellite cities around Hanoi.

Faced with this reality, young people now tend to prioritize quality of life, through balancing work and enjoyment, rather than “must own a home” despite the pressure of monthly debt payments.

Currently, the transportation network is being invested in and developed synchronously, helping to shorten travel time between regions and becoming more and more convenient. This factor will actively contribute to helping people be more willing to choose housing in areas further from the center - VARS commented.

However, to attract home buyers, according to VARS, investors need to offer more reasonable prices, suitable to the needs and affordability of people to create home ownership opportunities for many people.