Rents are rising

According to a report by the Vietnam Association of Realtors (VARs), over the past 5 years, the real estate market has witnessed a significant change in the perception of apartments.

More than 5 years ago, apartments were still considered by many to be a "consumer asset" and difficult to compare with other real estate segments. However, just a short time later, after the market was heavily affected by the Covid-19 pandemic, the imbalance between supply and demand became increasingly serious towards demand, and apartment prices entered a cycle of price increases that has lasted until now, even surpassing many other segments.

VARs research data shows that by the end of 2024, the average primary price of apartments in Hanoi will reach 70 million VND per square meter, an increase of 35.4% year-on-year, as newly opened projects are all in the high-end, luxury segment, leading to a sharp increase in secondary prices.

The price level of apartments is constantly increasing and establishing a new level, causing apartment rental prices to also tend to "climb", with an average increase of 10-20% in 2024.

In the city center, there are almost no apartments with rental prices under 10 million VND per month. The common rental price for a 1-bedroom apartment is from 10 - 15 million VND/month, and for a 2-bedroom apartment is from 15 - 20 million VND/month.

In suburban areas, the average apartment rental price ranges from 6.5-15 million VND per month, increasing from the common level of 3-8 million VND/month in less than 5 years.

Along with the price increase, the quality of apartment products has also been improved, with many “all-in-one” urban projects, providing desirable living spaces. This trend is driven by the increasing demand for rental housing due to the situation where selling prices are far beyond the financial capacity of most workers, making renting a necessary solution.

VARs emphasized: The continuous increase in rents has made it difficult for many workers, especially young people with low and middle incomes, to maintain their lives in urban areas, when rent costs account for 35-50% of their income. Combined with other living expenses, young people have almost no ability to save.

Many people can no longer afford to pay, forcing them to downsize, look for cheaper options or even leave big cities. The trend of moving to suburban areas is becoming more and more obvious, thanks to rents that are about 20-30% lower than the center.

However, moving far away also brings many challenges when the public transport system has not developed synchronously, travel costs increase,...

Notably, not only unskilled workers, but also highly-skilled young workers have begun to leave urban centers. When the quality of life has not met expectations because young people find it difficult to find comfortable living spaces and good quality services at affordable rents.

Housing support for young people

Mr. Nguyen Van Dinh, Chairman of VARS, said that, in addition to continuing to promote the development of the social housing segment, to support young workers, the State needs to soon research and develop a fund for long-term rental housing at low prices, prioritizing young workers, civil servants, young intellectuals, and workers in key industries.

The government should also encourage developers to build affordable housing through tax incentives, loan support or land cost reduction. At the same time, it should promote the development of public transport systems to help workers easily move from low-cost areas to work centers.

The government can study and apply the dormitory model for urban workers like in Singapore. Accordingly, in Singapore, the government provides low-cost housing for young people, single people and skilled workers.

Young workers who have just graduated and cannot afford to buy a house can rent an apartment at a price 40-50% lower than the market price. When they have enough money, they can buy an apartment with a subsidy program and low-interest home loans.

The second is Purpose-Built Dormitories, which mainly serve migrant workers and young workers without stable housing.

Each dormitory can accommodate 1,000 - 25,000 people, managed according to a modern model with clean rooms, guaranteed security, common living area, kitchen, bathroom, entertainment room. The system operates strictly, ensuring hygiene standards and labor safety.

For investors, as informed many times before, Mr. Dinh said that to ensure the sustainable development of the real estate market, investors need to research and develop housing products with prices more suitable to the needs of the majority of people.

Because although the demand for luxury housing is also very large, the main demand and the largest proportion in the market is affordable and mid-range housing.

"The real estate market will be forced to adjust when supply and demand are increasingly out of sync, causing purchasing power to decrease, when people who need to buy houses to live in do not have enough financial capacity, investors are also "bored" because of low rental rates, and the value is unlikely to increase strongly in the future," said Mr. Dinh.