Brian Jeffrey
Even households earning a combined 30 million VND monthly, ranking among the top earners, struggle to afford homes in major cities like Hanoi and Ho Chi Minh City if they follow the guideline of allocating no more than one-third of their income to housing expenses.
A report from the Vietnam Association of Realtors (VARS), utilizing data from the General Statistics Office’s 2023 survey on residential living standards, reveals that the highest income group (Group 5) has a monthly per capita income averaging:
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,
18.38 million VND in Binh Duong.
Although this income group seems capable of buying homes in cities like Hanoi and HCMC, the reality is decidedly different.
For a two-income household in this group, their total income is about 30 million VND a month or 360 million VND annually. Based on the one-third income rule, they can spend up to 6.7 million VND monthly, or around 80 million VND yearly, on housing.
However, in major urban areas, apartment prices range between 40–70 million VND per square meter, depending on the area and type. A 60m² apartment would cost around 2.5–3.5 billion VND.
If they consider purchasing a 3.5 billion VND apartment with a 70% bank loan (equivalent to 2.45 billion VND) at an interest rate of 8% over 20 years, their monthly mortgage would range from 25 to 27 million VND, totaling over 300 million VND annually.
With a budget of only 80 million VND per year for housing, this group effectively cannot afford to buy, as concluded by VARS.
VARS highlights that the rising unaffordability of housing can be linked to the steep increase in real estate prices in major urban centers, which has significantly outstripped income growth.
Since the onset of the Covid-19 pandemic, the cost of real estate, especially apartments in Hanoi, Da Nang, and Ho Chi Minh City, has steadily climbed, establishing a new price level that is 30% higher than in 2019.
The Ministry of Construction noted that by the third quarter of 2024, apartment prices in Hanoi shot up across both new and existing developments, with new project costs increasing 4–6% quarterly and 22–25% annually.
Data from Batdongsan shows that the average apartment listing price rose as follows:
34–37 million VND/m² in 2021,
38–40 million VND/m² in 2022,
39–42 million VND/m² in 2023,
45–51 million VND/m² in 2024.
In contrast, urban per capita income in 2023 has only grown by 4% since 2019, according to GSO data.
For the top income group, the average income in Hanoi and Da Nang saw increases of merely 3% and 7%, respectively, while Ho Chi Minh City experienced an 8% decline.
This expanding gap between incomes and housing costs has severely affected middle and upper-middle-class families.
Another factor VARS points to for the lack of affordability is the scarcity of affordable housing options, with few projects priced below 30 million VND/m², leaving many, including those at higher income brackets, with limited choices.
Speculative buying behavior has also significantly driven up real estate prices, as many buyers acquire properties for investment rather than for living in, often leaving them unoccupied while waiting for value appreciation, thereby aggravating supply and demand issues.
