House prices are 25 times higher than Vietnamese income.

31 million urban residents need to upgrade their housing, but housing prices 25 times income are a big challenge in the Vietnamese market.

Savills Vietnam has just released its latest report titled "The Big Wave", which covers many vivid slices, decoding the "iceberg" of the apartment market in two typical cities, Ho Chi Minh City and Hanoi.

27% of urban residents live in low quality housing

According to statistics from UN-Habita (United Nations Human Settlements Program), about 27% of urban residents in Vietnam are living in low-quality housing conditions, equivalent to 31 million people. Savills assessed that the more low-quality housing there is, the more demand for better housing will be stimulated. This is a potential source of demand for the housing market.

House prices are 25 times the median income.

According to Numbeo.com data in 2017, housing prices in Vietnam are 25 times higher than the average income of the people. This comparison shows that the potential and opportunity of the affordable apartment segment, under 900 USD per square meter in the Vietnamese market is huge. Because this is a housing product line close to the people's ability to pay.

66% of urban residents buy their first home to live in

In the second quarter of 2017, the proportion of people buying houses for living in developed urban areas in Vietnam was 66%. This data has a positive change and nearly doubled compared to the figure of 36% in the first quarter of the year. The proportion of people buying apartments for rent was 26% and those buying for short-term trading was 8%. This shift shows that the real demand for housing is increasing significantly.

2 big cities have 100,000 new families created each year

As of 2016, Ho Chi Minh City had 58,000 and Hanoi had 42,000 newly formed households. If including the two largest cities in Vietnam, the number of newly formed families each year is about 100,000 households. Most of these nuclear families have the need to move out to stabilize their lives. This is a huge driving force that is promoting the strong development of the housing market in general and apartments in particular.

In the second quarter of 2017, the proportion of first-time home buyers in the Ho Chi Minh City and Hanoi markets accounted for 66%, while those buying for rental investment was 26% and those buying for short-term trading dropped to a fairly low level (8%). Photo: Vu Le

Urban single-person household rate exceeds 10%

According to data from the General Statistics Office of Vietnam (GSO), the trend of single living in major cities in Vietnam has been increasing strongly since 1989. Specifically, the rate of single households in 1989 was only 4.6%, but in 2009 it jumped to 8.1%, nearly doubling. By 2014, this rate had exceeded 9% and is expected to jump to 10.1% in 2019. The strong growth of the group of urban single residents in Vietnam can stimulate the housing market to generate new needs.

Highest rental yield in the area

Hanoi has a rental yield (residential real estate) of 7.4% and Ho Chi Minh City is 5.8%, this index is higher than Jakarta (5.2), Kuala Lumpur (4.8), Manila (4.3), Bangkok (4.0), Singapore (3.7). With this performance, the residential real estate investment market for rent in Vietnam leads other countries in the region and is considered more attractive than neighboring markets.

Number of apartments delivered breaks all records

Since 2015, the housing market in Vietnam has completely moved into the post-crisis period, opening a recovery period. The most obvious sign is the number of apartments handed over each year has continuously increased sharply. In 2015, Ho Chi Minh City and Hanoi each had more than 10,000 apartments put into use. In 2016, Ho Chi Minh City had more than 25,000 apartments handed over (double the previous year) and Hanoi had about 15,000 products.

In 2017, the supply of completed apartments launched to the market in Hanoi and Ho Chi Minh City reached its peak, with each city having about 35,000 apartments handed over. This is a record-breaking supply for the market so far and this has created a lot of pressure on the rental housing market.

According to VNE