Home truth: living well more important than owning a house

Vu Minh Tra, 35, has saved a few billion dong (VND1 billion = $43,000), but he and his wife have no plans to buy a house in Hanoi, where they stay.

They do not mind spending around VND300 million a year on renting a high quality apartment.

"I value experiences more than savings. As long as we have a house, whether we rent or own it does not matter. Same thing with a car, as long as it's functional," said Tra, who used to work for a finance firm abroad before returning to Vietnam. "The most important thing is that our family enjoys comforts, enjoy our time together and have the time to travel for at least half a month every year."

Tra and his wife prioritize living well over owning a house. Family photo taken early 2020 during a 20-day Australia tour. Photo courtesy of Tra.

He said their experience-focused lifestyle began in 2012 when his wife was pregnant with their first child. At that time, they owned an apartment at the Linh Dam complex in the south of Hanoi, around 10km from their workplace. However, the traffic jams meant they did not have much time after work to enjoy their life.

After a few months, they decided to sell the house for a billion dong ($43,000), using part of it to rent a house closer to their workplace and part of it to build a business. Since then, they walk and cycle to their workplace.

In 2016, with a second child, the young couple moved to a high-end apartment for double the rent. They stayed there for more than three years before moving to another apartment with better facilities and services including a four-season swimming pool, movie theater and shopping center.

"This apartment is very convenient since my son's kindergarten is right at the foot of the building and it's super close to our places, five minutes away from my office and 15 minutes from my wife's workplace," Tra said.

"Many people, including my parents are surprised that I spend more than a thousand dollars a month to rent an apartment rather than buy a new one. However, after staying in a few rented apartments, we don't feel like we need to buy one."

Tra and his wife have based their decision on a cost-benefit analysis of renting and buying.

He calculates that it takes at least VND5 billion to buy a decent apartment, which will take him a few more years to earn. "This seems like a long time to us, while with only a small amount, we can enjoy the same comfort in a rented apartment."

Tran Thi Luong, business director of the NUCE Real Estate Investment Promotion and Brokerage Center, agreed that renting can be more beneficial, financially. For example, a two-bedroom luxury apartment in Ba Dinh District costs about VND 5.5 billion, while such an apartment can be rented for VND18-20 million a month.

View from a three bedroom apartment that in Hanoi that costs about VND3 billion. Photo by Tran Luong.

Meanwhile, VND5.5 billion deposited in a bank can earn interest of VND27 million a month. Therefore renting is more beneficial, especially with high-end apartments.

The expert said that although no obvious trend can be seen yet, the number of Vietnamese customers renting luxury apartments is increasing. "Most of them are young, high-income people likely to have lived abroad earlier," she said.

Nguyen Van Minh and his wife are satisfied with the apartment in the Duong Noi complex, Cau Giay district that they have rented for VND8 million a month. They have lived there for seven years. Minh finds living well more meaningful than working hard and living frugally just to save and buy an own house.

The 39-year-old man plans to rent a house for a long time and return to his hometown after retirement.

Minh calculates that a mid-range three-bedroom apartment in Hanoi is currently priced at more than VND2 billion. The rent for such apartments, VND 7-8 million a month, accounts for 3.5-4 percent of its value a year. Even with inflation, the rent would not exceed 5 percent. "If you borrow from a bank to buy a house, the annual interest rate is 9-11 percent. Is there anything left to say?"

He said that he told his wife. "Working hard only to repay debt and not daring to travel and enjoy life would be meaningless."

"Buying a house in the city requires a proper cash flow analysis. Each family needs to consider many factors before making a decision," said Luong of NUCE.

After years of renting houses, Tra and his wife have concluded that the rent should not exceed 30 percent of their total income, and that it's better to have a two-year lease at least.

Tra's family is not ruling out owning a house, though. They would like one on the coast of Nha Trang, but "that's for the long-term future. For now, we are satisfied with this lifestyle."