Income cannot keep up with real estate prices
The rental market has become the focus of attention as more and more people choose to rent instead of buy a house due to the continuous increase in real estate prices. According to real estate experts, in 2024, apartment prices in Hanoi will increase by 74% compared to the end of 2023.
Meanwhile, rental prices increased by 20% due to the sharp increase in demand for rental, stemming from the increase in real estate prices and the trend of finding cheap rental solutions. Service apartment rental prices also recorded an increase of 10-15% because this type is increasingly popular for its convenience and accompanying services.
However, in the second half of 2024, "not having enough money to buy a house" has become the leading reason why people choose to rent a house, accounting for 33%. Meanwhile, the motivation to rent a house because of "priority of flexibility" decreased to 27%.
With the average salary of young workers in Hanoi ranging from 10-15 million VND/month, owning an apartment worth 2-3 billion VND is too far away. If you save 30% of your monthly income, it will take a young person about 40-50 years to buy an apartment.
Previously, apartments were considered a reasonable solution for people with average incomes. However, currently, apartment prices have increased rapidly, ranging from 40-60 million VND/m2 in areas far from the center and 60-90 million VND/m2 in the central area. Thus, to own a 60m2 apartment, buyers must prepare about 2.5-5 billion VND, an unimaginable figure for new employees. Meanwhile, real estate prices in many areas have reached 100-300 million VND/m2, making the dream of owning a house distant even for people with high incomes.
Faced with this reality, many families have had to change their thinking about owning a house. Instead of trying to buy an apartment in the center, they look for alternative solutions. The trend of moving to suburban areas such as Dong Anh, Gia Lam, or even to neighboring provinces such as Hung Yen and Bac Ninh is increasing. However, the effect of the price "fever" also quickly spread to these areas.
New apartment projects in the suburbs of Hanoi are currently priced at no less than 35-50 million VND/m2, and in many places have even reached 60 million VND/m2. Land prices in the suburbs have also increased, many places have exceeded 100 million VND/m2. This makes the solution of "mitigating" to the suburbs no longer feasible for many young people with average incomes.
Is long-term house rental becoming a trend?
The trend of renting houses is increasing because people's financial capacity does not allow them to own real estate.
Most tenants are willing to spend 10% - 30% of their monthly income on rent. Currently, the rental price of a rental house in Hanoi ranges from 3 - 5 million VND/month, while the rental price of an apartment is around 10 - 15 million VND/month. Thus, to ensure financial capacity, an individual or household needs to have a total monthly income of 15 - 20 million VND if renting a house and 30 - 40 million VND/month if renting an apartment.
High rental prices compared to income, combined with the burden of living expenses, are a major obstacle for many people. However, due to income not keeping up with the annual increase in real estate prices, many people are forced to accept the option of renting a house instead of buying.
Currently, renting a house has become the optimal solution that most young people living in Hanoi choose. Gradually, they accept having to rent a house for the rest of their lives. On social networking platforms, rental groups in Hanoi are becoming a vibrant destination with thousands of interactions every day. These online platforms not only provide information about rental houses but also create a community of sharing experiences, helping each other find a place suitable for their budget.
According to Ms. Nguyen thi Hoa Dung - sales manager of Hoian d'Or Real Estate Company - this is an inevitable trend in the market, this will stimulate the real estate market to develop as the demand for rental will continue to increase strongly thanks to the increase in the large number of foreign experts coming to Vietnam to work through FDI projects.
In particular, in the context of changing consumer trends, the Millennials (25-38 years old) and Gen Z (18-24 years old), commonly known as MillennialZ, are playing an important role in the development of the digital economy, accounting for 47% of the country's population (equivalent to 45 million people).
This generation focuses more on lifestyle, living environment and utility systems to improve the quality of life. They tend to choose apartments with full amenities and a better living environment, which is difficult for real estate with equivalent prices to meet. Therefore, renting a house has become the priority choice for this group of people.
With these changes, it can be seen that renting a house is no longer just a temporary solution but has gradually become an inevitable trend in the context of constantly climbing real estate prices, said Ms. Hoa Dung.
