Hanoi and HCMC now proportionately more expensive than Singapore and Tokyo
HO CHI MINH CITY — To get by in Vietnam’s crowded, bustling capital Hanoi, university employee Nguyen Bich Ha shares a room with her husband and two kids that is 16.5 square meters in size, little bigger than a parking space for a car.
She wishes that the four of them could have a home of their own instead of living in a room in her husband’s parents’ house. She and her husband depend on the in-laws for help taking their children to and from school but sometimes disagree with them on issues related to bringing up the kids and the timing of meals.
“There isn’t much privacy either since there are many shared living spaces,” said Ha, 36. “And since it’s their house, we can’t make decisions on decoration or changes around the house.
“Obviously, I want my own place, but we cannot afford it with such terrible real estate prices,” she said. “I feel helpless, but I have to endure it. I keep saving, but the prices keep increasing. It’ll take me 10 more years of savings to afford the prices we see today.”
Millions of middle-class residents of Hanoi and Ho Chi Minh City are in the same boat as Ha, unable either to afford a city home of their own due to property developers’ inordinate focus on building luxury housing or to get a home through official social housing programs due to their income level and the limited availability of units. This has forced many to crowd in with extended family, accept substandard housing or bear with lengthy commutes made worse by rampant traffic congestion.
Many young workers in Ho Chi Minh City have crowded into old apartments with extended family since they cannot afford to buy a place of their own. (Photo by Nguyen Doan)
Prime Minister Pham Minh Chinh’s government has acknowledged this unfortunate side effect of Vietnam’s rapid economic growth and has made a series of pronouncements on creating more affordable housing. But the rebalancing of the real estate market in the country’s two main urban hubs is moving slowly, leaving many residents in an awkward state of limbo.
While home prices in Hanoi and Ho Chi Minh City are still low compared with those found in the private market in Singapore, Southeast Asia’s most developed economy, salaries are also far lower.
The Washington-based Urban Land Institute (ULI) earlier this year published a study that measured average home prices around Asia in proportion to median household income. Using this benchmark, Ho Chi Minh City and Hanoi are actually much pricier than Singapore, Tokyo or Seoul.
Moreover, home prices in the two Vietnamese hubs continue to surge. The average price paid per square meter during the July-September quarter was 60% higher in Hanoi than a year before and up 65% in Ho Chi Minh City, according to real estate services company Cushman & Wakefield.
In the eyes of a 39-year-old Ho Chi Minh City bank employee who gave his name as Arwen, the southern city’s housing market is “very insane.”
“The price is too high for younger people to buy,” said Arwen, who still lives with his parents. He calculates that it could take him another 20 years to have enough savings to buy his own place.
Vinhomes Grand Park in Ho Chi Minh City: Developers have focused on high-end and luxury projects. (Photo by Nguyen Doan)
“For some people who don’t have a high, good income — like us — it would take them a lifetime — a whole life — to buy an apartment and pay for a mortgage,” Arwen said.
In Vietnam, it is common for parents to help finance their children’s first home, but prices are so high that even with such support, buying is still out of reach for a large number of young workers, according to Tyler Manh Dung Nguyen, chief market strategist at Ho Chi Minh Securities. “Many people are starting to give up hope,” he said.
Thao, a 36-year-old customer service agent in Ho Chi Minh City, is among those who have lost heart. She and her Vietnamese peers “are obsessed with owning a house, to feel safe to raise a family,” she said, but added, “It’s hopeless.”
A homebuyer in Hanoi discusses her purchase with a Vinhomes agent, right, in December 2024. (Photo by Yuki Kohara)
While some young Vietnamese professionals are now more willing to consider renting, there is simply not much affordable supply in that market segment either. According to ULI’s calculations, the median monthly rent in Hanoi and Ho Chi Minh City in 2024 equated to a far higher share of average household income than in Singapore, Tokyo or Seoul.
Bao, 32, works for an insurance company in Ho Chi Minh City and feels he has little choice but to live with his mother, saying that rents are “going up like a rocket.”
While native local working-class residents may be eligible for social housing, which can include both rentals and for-sale apartments priced below market levels, migrants from the countryside who come to work in Vietnam’s metropolises face a tougher situation. Tu Phuong Nguyen, a lecturer in Asian studies at the University of Melbourne, recently visited the living spaces of Ho Chi Minh City shoe factory workers. In “very poor” conditions, they typically have to share toilets and wash their dishes in outdoor common areas.
Even Nguyen Van Dinh, chairman of the Vietnam Association of Realtors, agrees that the private property markets of Hanoi and Ho Chi Minh City are “highly imbalanced.”
Migrants from the countryside who come to work in Ho Chi Minh City face tough living conditions since they are ineligible for social housing in the metropolis. (Photo by Nguyen Doan)
According to Cushman & Wakefield, “high-end and luxury apartments accounted for 91% of new supply” in Hanoi during the July-September period.
In Ho Chi Minh City, realtors are now marketing units in a high-rise project from local developer Masterise Homes designed by the famed British architectural firm Foster + Partners at 125 million dong ($4,737) per square meter. Promotional materials say Masteri Park Place, which is to have more than 1,500 units that will start in size from 51.9 sq. meters, will feature “the longest musical water canal in Southeast Asia,” grassy riverbanks and floating decks.
“Most new projects are concentrated in the upper-middle, high-end and luxury segments, while affordable and mid-range housing is largely absent,” Dinh said. The imbalance is unsustainable, however, he warned: “This divergence between prices and fundamentals suggests potential bubble risk, where asset prices no longer reflect their intrinsic value and significantly exceed average income growth.”
Yet for Vietnamese developers, the focus on the high end is simple market logic, according to Ho Chi Minh Securities’ Tyler Manh Dung Nguyen: Luxury apartments generate higher profit margins and continue to find ready buyers in Hanoi and Ho Chi Minh City.
Much of this demand comes from speculators and wealthy domestic investors looking at where their money can earn the best return amid inflation worries, he said. “Because of that, developers … are always focusing on high-end housing.”
An ad for homes in Eco Retreat Long An, a new high-rise development southwest of Ho Chi Minh City. (Photo by Govi Snell)
Low bank deposit rates are aggravating the situation, according to Troy Griffiths, deputy managing director of the Vietnamese arm of real estate services company Savills.
“More money goes into property because it’s less attractive to have your deposits sitting in the bank,” he said. “As the deposit rate goes up, then less money goes into property, and it goes back into the bank.”
The Vietnamese central bank’s easy money policies are not helping either, said Le Hong Hiep, a senior fellow at the ISEAS-Yusof Ishak Institute in Singapore. Borrowers able to take out bigger loans at lower interest rates are chasing high-end properties, pushing prices up further.
Some observers argue that excessively close links between banks and developers in Vietnam exacerbate the market’s skew toward luxury.
Ho Chi Minh City’s skyline includes a growing number of high-rise apartment buildings. (Photo by Nguyen Doan)
Tan Huynh, managing partner at data analytics company THKeymaker in Ho Chi Minh City, said that unscrupulous executives exploit these links by leveraging luxury apartments carrying marked-up prices as collateral to secure bigger business loans.
“What they do is they create a mechanism to move this money from the banking system — which is supposed to stimulate economic development — and then they turn this into their private wealth,” Huynh said.
Prime Minister Chinh has made a point of publicly siding with the aggrieved urban middle class. In a widely circulated video of a cabinet meeting in September, he indignantly asks his ministers, “If an apartment costs over 70 million or 100 million dong per sq. meter, who has the money?”
At a September cabinet meeting, Prime Minister Pham Minh Chinh lost his temper complaining about high property prices. (Screenshot from Vietnam Government News)
The rare outburst may have been a canny move by Chinh. “You can see his facial expression,” said ISEAS’ Hiep. “He’s quite frustrated and he’s angry. … [But] the question he posed is quite ironic because he should be the one who knows the answer to the question of why the price is going up and keeps going up.”
Chinh is doing more than asking questions. In July, his government announced it would allocate $197 million for a National Housing Fund to purchase, build and manage buildings for public rental housing. The income eligibility threshold for social housing was raised to 20 million dong a month from 15 million dong in October.
Chinh and his team have also pledged to streamline development approvals and accelerate construction of social housing, with an eye toward providing 1 million new units by 2030. Vingroup, one of the country’s largest conglomerates, responded by pledging to build 500,000 affordable homes. Pending legislation would require local governments to allocate at least 20% of new commercial housing projects for affordable units and limit mortgage lending for homeowners buying additional properties.
Such measures will give policymakers more useful tools to keep the property market in line, said Hoang Tran, a senior research analyst at the Vietnam Association of Realtors.
“Over the past two decades, Vietnam’s real estate market has expanded on the back of rapid urbanization, while land-use governance and regulatory capacity have struggled to keep pace,” he said. Vietnam’s challenge now is to catch up with neighbors like China in developing policy levers to address market imbalances in a targeted way.
Some market players think the affordability crisis will ease as public transport improves in Hanoi and Ho Chi Minh City, making commuting from outer suburbs with cheaper housing easier.
“There’s plenty of affordable housing in outlying areas, so I don’t see the problem at all,” said Savills’ Griffiths, with “300 kilometers of metro lines being delivered by 2035, everybody will have access to affordable, really cheap, transport-oriented development.”
Hanoi and Ho Chi Minh City have been opening new metro and commuter train lines: Improved public transport will make commuting from city suburbs easier. (Photo by Yuki Kohara)
In Hanoi, Nguyen Bich Ha is hopeful that maybe she and her husband can buy a small apartment in a social housing project on the outskirts of the capital if the official income threshold is relaxed further in the coming years.
“We’re stuck in the middle,” she said. “We don’t have enough money to buy commercial housing, but we aren’t qualified to buy social housing.
“I saw a lot of news about social housing lately, on how there will be a lot more supply for social housing available. I am not certain how likely we can own one, but our only option is social housing. That’s where we see an opportunity.”
Govi Snell is a contributing writer. Additional reporting by Mai Nguyen in Hanoi.
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