Housing prices in Germany and Vietnam: A similar challenge

I recently read an article about how people in Germany often prefer renting to buying homes. As someone from Hai Phong in northern Vietnam, this resonated with me. Many of my relatives and neighbors have lived in Germany for years, and my older brother has also worked there.

The issue of exorbitant housing prices in Germany's major cities mirrors the situation in Vietnam. For instance, a 70-square-meter apartment near KaDeWe department store in Berlin was priced at €1.8 million (US$1.89 million) in 2019. Just a short distance away, the Charlottenburg railway station near the upscale Kurfürstendamm shopping street is crowded with homeless people.

An apartment building in Berlin, Germany. Illustration photo by Pexels

Similarly, housing prices in Vietnam's largest cities, Hanoi and Ho Chi Minh City, are extremely high. This is largely due to the population flocking to these urban hubs, driving up housing demand. Properties 30 to 100 kilometers from these cities are far more affordable.

For example, a prime plot of land between Binh Long and Chon Thanh, costs only a few thousand dollars. This area, located just over 100 kilometers from the city, is also near a planned expressway.

In Hanoi, land in areas like Luong Son and Hoa Binh, only a few dozen kilometers away, is much cheaper than plots within the city.

Despite these lower prices, people still prefer to live in megacities, where housing is significantly more expensive. Better transportation infrastructure does not seem to be the main factor. I've taken a bus from HCMC to Chon Thanh, 80 kilometers away. The trip was quick—just two hours on well-maintained roads. Yet, unlike in countries where people live in the suburbs and commute to urban centers for work, few people in Vietnam buy homes in areas like Chon Thanh or Binh Long for this purpose.

I believe the preference for personal vehicles, especially motorbikes, over public transportation plays a significant role.

In the end, both Germany and Vietnam face the challenge of exorbitant urban housing prices. Germany stands out with its better social housing policies. But while Germany provides more robust support for affordable housing, its citizens pay for these benefits through higher taxes. For example, Germans earning €11,604 (US$12,207) or less annually are exempt from taxes, but those in higher brackets face tax rates of up to 42%.

Everything comes at a cost—Germany's better housing policies are balanced by its higher taxes, while Vietnam's reliance on personal transportation influences its housing market dynamics.