Hanoi among the 10 most costly capitals for real estate

February 15, 2023 | 14:17
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Vietnam is among the 10 countries where capital-city real estate values are highest in relation to income, taking almost 45 years to purchase a home.

Early in February, NetCredit, an American technology business, published a report on the worldwide real estate market status in 73 capital cities from October 2021 to October 2022 that was based on more than 800,000 online home sale listings.

According to NetCredit, the average property price over the aforementioned time period ranged from $4,100 to $251,000 per square metre for both houses and flats.

Meanwhile, the General Statistics Office reported on January 10 that the average monthly salary of Vietnamese employees in December 2022 was $321, a rise of $40 on-year.

Hanoi among the 10 most costly capitals for real estate
Annual salaries to purchase median real estate by country. Photo: NetCredit

NetCredit estimates that due to the disparity between average income and housing costs in the capital, it takes residents an average of 45.1 years to purchase a home. Comparatively, in Bangkok, property prices are around $193,000, and it takes 28.5 years to own a property.

Experts explain that the discrepancy by stating that the major cities for real estate development have a wider gap between the high-end and low-income housing sectors.

Specifically, Nguyen Chi Thanh, vice president of the Vietnam Association of Realtors said, "The demand for social housing is quite high, but the market supply is indeed very limited."

He said that for a long time, despite the high demand, there were too few items in this market category, and that Vietnam has not totally resolved this issue.

According to Thanh, it will be difficult to lure investors into the building of social housing if the existing laws are maintained. This is because the investment method for social housing is identical to that for commercial housing, the only difference is that land use fees are not levied. These rules have made investing tough.

Recently, the real estate market has been characterised by unchecked growth and profit-seeking. Additionally, the vice president feels that the structure of real estate goods is unsuitable.

"There is an excess of luxury real estate and a deficiency of real estate that meets actual usage requirements," Thanh stated.

According to the Ministry of Construction, real estate speculation is still prevalent, particularly in big metropolitan centres such as Hanoi and Ho Chi Minh City, resulting in a lack of sustainability and consistency on the real estate market.

"There is also the problem of real estate trading websites conspiring with one another, hoarding products, inflating prices, and disrupting the real estate market," the agency noted.

Troy Griffiths, deputy managing director of Savills Vietnam, determined that there have been several developments lately that have had an effect on the real estate market, such as a 30 per cent decline in the value of stock market indices. In addition, investigations are being carried out to clean up and improve the transparency of the corporate bond market. This will have a substantial effect on the economy as a whole and on the debt structure of investors. To reach clients, the market will have to gradually move back to the true worth of real estate.

"Large metropolitan areas in particular, and Vietnam in general, must undergo real estate market purification. This will necessitate tougher rules to protect investors in every emerging nation on the planet. This is the way things should be," said Griffiths.

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By Quynh Trang

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