The elusive dream of owning a home in Hanoi

But each time they seemed to near their goal, apartment prices surged to new levels.

The two office workers, in their late 20s/early 30s, lived in Cau Giay District, earning around VND20 million a month and raising a child. Since neither of their parents could provide financial assistance, the prospect of getting a bank loan of VND600 million to buy a property weighed heavily on their minds.

"Pooling all our resources to buy our own place and then dealing with monthly interest payments... Any unforeseen circumstance would leave us very financially vulnerable," Ha says.

They decided to continue saving for a few more years until they could afford to put down two-thirds of an apartment’s price upfront.

But despite not having enough money they decided to take a risk and make a purchase anyway. They began looking for affordable apartments, consulting brokers and seeking information about interest and principal payment schedules.

Unfortunately, apartments that once cost VND20 million per square meter had now risen to VND25 million.

"Our savings increased by only VND100 million, but the cost of the house escalated by three times that amount," Ha says regretfully.

Hoang Ha at her rented apartment in Cau Giay, Hanoi, in March 2024. Photo by VnExpress/Pham Nga

Undeterred, she and her husband continued to work overtime on Saturdays and Sundays to boost their income.

Last year, with around VND900 million in their kitty, they revisited an apartment they had researched earlier. To their dismay, the price had risen VND1.1 billion earlier to over VND2 billion.

"After three years of slogging our savings had nearly doubled, but it was still short of half the price of the apartment," Ha says. "The gap keeps getting bigger and bigger."

She has grown disheartened that their search proved fruitless and, at times, frustrated with her husband for not trying harder.

"Once I stumbled upon a message on my husband's phone. It turned out he had been in touch with brokers for various projects, but decided to not tell me due to the steep prices".

Duc Thanh and his wife, 30, faced a similar dilemma. They opted to move from the inner city temporarily to Hoai Duc while keeping an eye out for an affordable dwelling.

However, despite doing multiple jobs and saving as much as they could, the couple found themselves unable to buy a property due to the relentless price rise.

Duc lament: "The apartment we're renting is around 70 square meters. Last September it cost VND1.7 billion, but this year it has soared past VND2 billion. Meanwhile, our total assets increased by just over VND100 million."

Duc compares their financial struggles to a race between a tortoise and a hare: "Though I toil tirelessly I remain far behind in the race for an affordable house."

Dr Nguyen Tri Hieu, a financial expert, says aspiring home owners like Ha and Thanh are increasingly left behind since incomes fail to keep pace with the rise in property prices.

Hanoi's average per capita income in 2023 stood at VND151 million after a 6% annual increase since 2019.

But apartment prices have been growing around 14% a year. In 2023 the average price on the primary market was an eye-watering VND53 million per square meter.

In the inner city, apartment prices skyrocketed by 77% over the past year and averaged the equivalent of 45 years' of per capita income.

In 2024 Hanoi remains among the world's capitals with the most unaffordable housing.

According to the House Price to Income Ratio (HPR) report for 2024 by Numbeo, a Serbian internet database on the cost of living, Vietnam's average housing price currently stands at 23.7 times the average annual household income.

An apartment building in Cau Giay District, Hanoi. Photo by VnExpress/Pham Nga

Tran Luan, a real estate broker working on a project in Ha Dong, has seen an unbelievable surge in property prices during his five years in the field.

He says: "Some couples spend an entire year searching for a suitable home only to find themselves unable to make the purchase because prices are rising every single day."

The escalating housing prices can be attributed to several factors, Vo Huynh Tuan Kiet, director of the housing development department at property consultancy CBRE Vietnam, says.

The limited supply plays a significant role, with most new projects targeting the high-end market, he says.

Unfortunately, the mid-priced segment, the only one affordable for a majority of buyers, has low supply while affordable options have all but vanished.

Hoarding by affluent individuals could be another reason for the soaring prices. Luan explains: "While ordinary buyers focus on a single house transaction, wealthier investors amass dozens of properties.

"They seek out inexpensive units, inflate prices, and then sell at a premium, driving up overall housing costs."

Hieu emphasizes the importance of financial planning when buying a house, saying families should assess carefully or seek advice from financial experts to avoid situations where interest payments become unmanageable or delays lead to missed opportunities.

"Prospective buyers should ensure that their monthly principal and interest payments do not exceed 60% of their income."

Banks should have long-term loan programs with low or fixed interest rates for aspiring home owners, he says.

But he cautions against falling into the trap of seemingly attractive interest-free loans that later fluctuate with market conditions.

Borrowing is in fact the biggest concern for Hoang Ha and her husband after witnessing friends and acquaintances struggle with loan payments.

Ha’s best friend and her spouse for instance pay a whopping 70% of their monthly earnings for a bank loan, leading to constant family arguments.

"The house suddenly became an overwhelming burden, and that terrifies me," Ha admits. "Some people call us meek for procrastinating, but they won’t be the ones paying off our debt."

Beyond the soaring house prices, the murky legality of many property projects adds to the anxiety of ordinary folks like her.

Her first daughter is now in first grade, and the couple are expecting a second child.

She has had her eye on an apartment close to her current residence for a while now, but, like all other apartments in Hanoi, its price is not going down.

Yet the couple are determined to persist with their dream. They look forward to a day when the market frenzy subsides and they can finally purchase their dream home.

"There is a small shrine in the building of the apartment I want. Every time I pass the place I stop and say a prayer, hoping that we can finally make the purchase," Ha says. "This is the third year I am doing this, and I am still waiting for our chance to come."