Housing affordability in Việt Nam has declined due to high housing prices. —VNA/VNS Photo

HÀ NỘI — High house prices are making it hard for even well-paid people to afford a home in cities, according to the Vietnam Association of Realtors (VARS).

According to VARS' most recent report, based on data from the General Statistics Office’s (GSO) 2023 Residential Living Standards Survey, housing affordability in Việt Nam has declined.

In Hà Nội and HCM City, the price of commercial apartments range from VNĐ40 million–VNĐ70 million per sq.m, (US$1,574 and $2,755) depending on the location and segment. A 60sq.m apartment would cost between VNĐ2.5–3.5 billion.

If a couple needed to borrow 70 per cent of the property’s value at the current annual interest rate of 8 per cent, the monthly mortgage payment on a 20-year loan would be VNĐ25-27 million.

Assuming said the couple are both in the top 20 per cent of middle-income earners and earn a combined VNĐ30 million a month, the monthly loan repayment would still far exceed a third of that amount, it said.

However, Deputy General Director of batdongsan.com.vn Nguyễn Quốc Anh said, the gap between the average salary and house prices has showed that Vietnamese young people have always faced financial struggles in order to afford a home.

According to the PropertyGuru Vietnam, in 2004, set against the average house price and income, an individual needed to accumulate 31.3 years of average salary to afford a 60sq.m apartment priced at VNĐ600 million, while the interest rate for savings were at 7.4 per cent.

By 2014, they would need to save a salary of 22.7 years to purchase a similar apartment, which had risen to VNĐ1.5 billion, while the saving interest rate dropped to 6 per cent.

In 2024, the buyer would need the equivalent of 25.8 years of salary saving to afford the same apartment, now priced at VNĐ3 billion, despite a lower saving interest rate of 4.5 per cent.

Although the number of years of accumulating income and interest rates have decreased over time, young people of all generations still need to save over a long period in order to own a house, said Quốc Anh.

CEO of Dova Land Đỗ Văn Thạch, said current real estate prices are still a big challenge for people. To own an apartment in Hà Nội at the current prices, the buyer needs an income at least VNĐ60 million to VNĐ70 million per month. This is a high income, far beyond the ability of most.

Professor Đặng Hùng Võ, former deputy minister of Natural Resources and Environment, warned that the surge in house prices, far outstripping salaries for most, not only puts pressure on social security, but also promotes real estate speculation. VNS