High income earners also find it difficult to buy a house.

According to a report from the Vietnam Association of Realtors (VARS), the housing affordability of Vietnamese people has been declining sharply in the past few years, to the point that the highest income group in Vietnam (group 5, accounting for 20% of the population) as classified by the General Statistics Office cannot buy a house, if considered according to the rule that house prices do not exceed 1/3 of income.

The 2023 survey on living standards of the population by the General Statistics Office shows that the labor group with the highest average monthly income by region is Binh Duong (18.4 million VND), Hanoi (14.5 million VND), Dong Nai (13.9 million VND), Da Nang (13.8 million VND) and Ho Chi Minh City (13.3 million VND).

This is the group that is expected to be able to own a house without support from the Government. However, in reality, when faced with the problem of owning a house in big cities like Hanoi and Ho Chi Minh City, even this group encounters many obstacles.

VARS's calculations show that if a household in Hanoi has 2 main workers who are both in group 5, the average total income will be around 30 million VND per month (equivalent to 360 million VND per year). Applying the rule that housing costs do not exceed 1/3 of income, this family can only spend a maximum of 6.7 million VND per month to buy a house (equivalent to 80 million VND).

Currently, the selling price of apartments in Hanoi and Ho Chi Minh City is from 40-70 million VND per square meter. Based on an average of 58 million VND per square meter, a 60 square meter apartment will cost 3.5 billion VND.

If you borrow 70% of the house value (VND 2.4 billion) from the bank at an interest rate of 8% for 20 years, the monthly installment payment will be around VND 25-27 million (equivalent to VND 300 million per year), far exceeding the maximum payment based on income and making it almost impossible to buy a house.

"If the highest income group in the country is still facing difficulties, then lower income groups have almost no opportunities," VARS said.

A recent study from Batdongsan also shows that the rate of increase in housing prices in Vietnam is far exceeding income and workers, regardless of age, are having difficulty accessing them.

Specifically, the growth in housing prices in Vietnam in the past 5 years has reached 59%, in which the average housing price in Hanoi is currently 61 million VND/m2 and in Ho Chi Minh City is 57 million VND/m2. The average monthly income of a Vietnamese worker is about 7.5 million VND, increasing by 7% per year.

According to Batdongsan, if comparing average salary and house price, a worker in his or her 30s will spend about 25.8 years of income to buy an apartment (60 square meters) for about 3 billion VND, under the condition of a mobilization interest rate of 4.5%.

Data from Numbeo, a global cost of living statistics platform, shows that Vietnam's House Price to Income (HPR) index in mid-2024 reached 22.8 points, among the highest in Southeast Asia. Vietnamese people's ability to pay for loans is also very low, reaching only 0.4 points, clearly reflecting the gap between income growth and house prices.

Explaining the reason for the sharp decline in housing affordability over the past few years, VARS said there are four main factors. First, the rate of increase in housing prices in large cities (which are already beyond the financial capacity of the majority of people) is many times faster than the rate of increase in income.

Specifically, after the Covid 19 pandemic, real estate prices, especially apartments, have set a new level of 30% higher than in 2019. Meanwhile, the average income per capita in urban areas in 2023 will only increase by about 4% compared to GSO statistics in 2019. The average income of group 5 in Hanoi and Da Nang in 2023 will only increase by 3% and 7% respectively, while Ho Chi Minh City will even grow by negative 8%. This makes the gap between income and housing prices increasingly wide, especially for middle-class and upper-class households.

Next is the shortage of suitable housing supply, the market focuses on building high-end houses, forgetting about affordable houses (under 30 million VND/m2) while the demand falls into this segment, causing the majority of people, including group 5, to have no suitable choice. Speculation and hoarding of assets not for use but just waiting for prices to increase causes waste of land, increasing the imbalance between supply and demand.

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

Sharing the same view, Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan, commented that the proportion of accumulated assets in Vietnam's GDP is quite high, about 32.8%, ranking 27th in the world. With the amount of accumulated money, Vietnamese people tend to invest in real estate due to high yields, averaging from 13.7% - 19.7% per year.

In addition, the proportion of real estate tax in Vietnam's GDP is at 0.03%, much lower than other countries. Real estate owners also do not have to pay property tax while the tax bracket and transfer fees are among the lowest in the world. This promotes increased speculation, causing "price inflation", negatively affecting social security, and creating macroeconomic risks.

Proposing solutions, 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.

"If the connecting infrastructure is improved, people will not need to cluster in the center but will be willing to move further away to where businesses can develop affordable housing projects," VARS said.

In addition, according to experts, to prevent the rapid increase in real estate prices, many countries are using strong tax tools in many aspects. Therefore, it is time for Vietnam to issue a comprehensive tax policy to regulate market behavior, helping real estate develop healthily.