A laborer needs to save for 25 years to buy an apartment

By Vu Le   March 27, 2023 | 04:30 am PT
A laborer needs to save for 25 years to buy an apartment
Apartment buildings along the Hanoi highway, HCMC. Photo by VnExpress/Quynh Tran
For an average income person living in Ho Chi Minh City, 19-24 years of savings is needed to buy an apartment costing VND2.5-3.5 billion ($106,300-$149,000).

It is now nearly impossible to buy a new apartment at the VND2 billion mark. According to a report in 2022 from Rever, a Southeast Asia technology firm in real estate brokerage, for VND1.5-1.8 billion, one can buy a 30-55 square meter apartment built 6-10 years ago in Thu Duc City, on the secondary market.

The average income of workers in Ho Chi Minh City (HCMC) this year is about VND148 million a year, according to property listing platform Batdongsan.com.vn. By that calculation, it will take up to 24 years to save, with no spending on anything, just to buy an apartment. The type of apartment used in this survey costs VND3.5 billion per unit.

The data also shows that Vietnam ranks first in Southeast Asia in terms of the gap between house prices and average worker incomes.

From 2018 to 2021, the ratio of the difference between real estate prices and the average income of Vietnamese has continuously increased, surpassing even Singapore. On the other hand, Indonesia, Malaysia and Thailand shows signs of falling in this index.

In a similar survey, Phu Vinh Group – a real estate investment consulting firm in HCMC – points out a shorter accumulative time to buy a house, but this only applies to the lower priced apartment segment.

With the common affordable housing price in the city at VND2.5 billion per unit, and the real income salary of workers (according to data from the Department of Labor, Invalids and Social Affairs in 2022) reaching VND11 million per person per month, the firm estimates that it will take 19 years of saving to buy an apartment.

Phan Cong Chanh, general director of the Phu Vinh Group, acknowledged that having to save for a long time to buy a house is a common phenomenon in many countries in the region and around the world.

He shared that workers in Ho Chi Minh City who use 100% of their savings to buy a house often fall into the group of customers with good financial conditions, having accumulated very early or with financial support from their families. For this group, the most important factor is the convenience of the location to the workplace, and if they are satisfied, a quick purchase will take place.

For the group only using about 50% of their income or less to accumulate, the time required to buy a house will be longer because house prices increase faster than income. This group often first considers the reputation of the seller and seeks a loan at a reasonable interest rate, which might delay the decision to purchase for a long time.

Nguyen Quoc Anh, deputy general director of Batdongsan, said that buying houses in Vietnam’s big cities will be increasingly difficult. He predicted that the gap between house prices and the average income of people will widen in the near future.

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