House prices average nearly 24 times annual household income

According to the Ministry of Construction, the house-price-to-income metric is used by many countries to assess the "reasonableness" of house prices.

The ration has risen by a fifth since 2019. This means houses have become increasingly out of reach for Vietnamese in the past five years.

But the same trend can be seen in many other countries, according to real estate agency Avison Young Vietnam.

In the 2019-24 period several Asian countries, such as the Philippines and Indonesia saw even higher house-price-to-income growth rates than Vietnam of 23.69% and 36.83%.

Some other countries like South Korea had lower growth rates (13.21%).

Singapore and Hong Kong were outliers with the ratio decreasing by 33.8% and 35.05%.

In the latter it was at 32.1.

An increasing number of young Vietnamese are considering renting instead of buying a house, given the rising house-price-to-income, Avison Young said.

But rents are also rising, it noted.

In HCMC and Hanoi, the country’s two biggest cities, house rents and other related costs have been on the rise for the last three years.

Data from the General Statistics Office showed that the housing and construction materials price index increased by 0.43% in February.

Specifically, house maintenance material costs increased by 0.48%, home repair services by 0.71%, electricity tariffs by 0.78%, and water tariffs by 1.73%.

As living costs, house prices and rents rise, an increasingly higher proportion of urban residents' incomes go toward housing, an essential need that is gradually inching toward becoming a "luxury," according to Avison Young.

It said that expanding the urban population towards outskirts or even adjacent provinces could make housing more accessible.

However, with an urbanization rate of 42.6%, and forecast to reach 50% by 2030, the housing issue requires a more multidimensional approach, it said.

Increasing housing supply is a sustainable way to stabilize prices and rents.

David Jackson, CEO of Avison Young Vietnam, said housing should be seen as "essential infrastructure for social welfare" just like roads, electricity and water.

"Thus, housing development policies should be built with the aim of addressing social welfare issues and be supported by long-term state investment funds as well as subsidized credit."

Additionally, private developers should focus on properties that serve housing needs.

"The housing challenge will be more severe if properties in the real estate market do not correspond to the actual value they provide to the community and society, specifically in satisfying housing needs."