Hanoi housing prices outpace people’s income

By Ngoc Diem   August 3, 2023 | 03:41 pm PT
Hanoi housing prices outpace people’s income
Apartment towers near Ring Road 3 in Hanoi. Photo by Ngoc Thanh
Housing prices in Hanoi have grown at twice the rate of people’s incomes since 2019, according to real estate consultancy Savills Vietnam.

The city is striving to reach per capita income of VND150 million (US$6,356) by 2023, representing a 6% annual increase since 2019.

In the same period, apartment prices have risen by 13%.

According to another consultancy, CBRE Vietnam, the average selling price of an apartment in the secondary market in the second quarter of the year was VND33 million per square meter while that of townhouse was VND154 million.

The average income of a salaried worker in Hanoi was VND9.7 million a month, according to the General Statistics Office.

Thus, if a person relies only on their salary to buy a home, they will need nearly 15 years’ income to be able to buy an apartment of 50 square meters and 100 years’ income to buy a 75-sq-m townhouse.

Real estate trading website Batdongsan said the average income of Hanoian workers is VND135 million while the average prices of a townhouse and apartment are VND6.3 billion and VND3.1 billion.

According to the website, Hanoi ranks first in Southeast Asia in terms of the difference between housing prices and average income.

Between 2018 and 2021 the difference increased steadily to go past even that of Singapore.

The price of an apartment in Singapore in 2020 on the primary market was equivalent to 15.4 years of median household income, according to data from market research firm Statista.

In Indonesia, Malaysia and Thailand, the gap is showing signs of narrowing.

A study by U.S. technology company Enova International’s platform NetCredit found that the price of a house in Hanoi is equivalent to 45 years’ average income. This makes Hanoi among the most difficult capitals in the world to buy housing.

Do Thi Thu Hang, senior director of Savills Hanoi, said the demand-supply gap is still big, leading to high prices.

In 2023-25 Hanoi will add 157,000 households but only 59,000 luxury apartments, 9,000 low-rise houses and 18,700 social housing units. There will thus be a shortfall of 70,300 housing units.

Apartments selling prices have risen for 18 consecutive quarters to be 73% up from the first quarter of 2019.

Savills blamed this on the increases in land prices and construction costs.

Investment in improving product quality and surrounding utilities and infrastructure also pushes prices of new properties up.

Vo Hong Thang, deputy director of R&D at property consultancy DKRA Vietnam, said a person’s income needs to be at least VND25 million a month to be able to buy an apartment in installments in Hanoi.

That apartment would be around 50 square meters and cost less than VND40 million per square meter, or VND2 billion in all, he said.

Buyers need to have a long-term accumulation plan to ensure they have at least 40% of a house’s cost before borrowing from a bank, he said.

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