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The Rising Cost of Rent: Young Renters in Ho Chi Minh City Seek Affordable Housing Away From the City Center

In a market where new apartment supply is scarce and rental prices are soaring, young tenants are opting to venture out to the suburbs to rent or buy, in a bid to reduce their living expenses.

Administrator

8 July, 2024

Rental Apartments Keep Getting Pricier

After renting an apartment at The Sun Avenue in Thu Duc City, Ho Chi Minh City for two years, Mr. Tran Thanh T. and his family are about to move out again. According to Mr. T., they are currently renting a two-bedroom apartment for VND 16 million/month.

Explaining the reason for choosing to rent at The Sun Avenue, Mr. T. said that since he and his wife have a young child, they needed a two-bedroom apartment for more space. This apartment complex is located in the center of Ho Chi Minh City, making it convenient for commuting to their workplaces.

“The rent for our apartment has been increasing yearly. In the first year, the rent was only VND 15 million/month. In the second year, the landlord increased it by VND 1 million/month. Recently, as our rental contract was about to end, the landlord informed us of another 10% increase,” Mr. T. complained.

Rental prices in Ho Chi Minh City have been on a constant rise in the past year. Photo: Anh Phương

Due to the instability of their income and the overall increase in living expenses, Mr. T. has decided to return the apartment and look for a new one farther from the city center, with a more reasonable rent.

Facing similar rent hikes, Mr. Nguyen Viet Q. (from Dong Nai province) shared that he is also planning to move out of his current mini-apartment on Ky Dong street, District 3. The 50m2 apartment is currently rented at VND 17 million/month, and the landlord has just informed him of another price increase starting from next month.

According to Mr. Q., he has been renting this apartment for three years, from when he was single until now that he is married. Currently, he and his wife have saved up about VND 2 billion and are planning to take out a bank loan to purchase a new apartment. Their target is an apartment with an area of more than 80m2, priced at around VND 4 billion, and they are looking at the old Thu Duc area.

Data from a market research company shows that, in the past year, rental prices for apartments in many districts and counties in Ho Chi Minh City have increased by 4-40%.

For instance, rental prices in District 4 and Phu Nhuan District have risen by 17% and 28%, respectively, corresponding to increases of VND 13.5 million and VND 9.6 million compared to the middle of last year.

The average rental price for an apartment in District 3 is currently VND 8.3 million/month, compared to VND 7.6 million a year ago. In Thu Duc City, the average rental price has increased by 12.4%, from VND 9.2 million/month to VND 10.3 million.

New Apartment Supply Remains Scarce

Most of the new apartment supply in Ho Chi Minh City today comes from the next phases of existing projects. Additionally, a few projects are at the foundation construction stage and are only accepting reservations as they do not yet meet the conditions for capital mobilization.

According to a survey by VietNamNet, the current primary apartment supply in Ho Chi Minh City is mainly concentrated in the East area, specifically in the old Thu Duc district. There are two projects currently being sold there: Fiato Uptown and King Crown Infinity.

The supply of new apartments in Ho Chi Minh City remains scarce. Photo: Anh Phương

The Ho Chi Minh City Department of Construction reported that, in the first six months of this year, they received four project dossiers for confirmation of eligibility for capital mobilization for future housing projects. However, upon review, none of these projects met the required conditions.

In a recent report, the Ho Chi Minh City Real Estate Association (HoREA) stated that, in the first quarter of 2024, the city had only one commercial housing project approved for investment, with a land use area of over 3,600m2.

In addition to the 62 commercial housing projects currently under implementation, with a total scale of nearly 28,500 apartments, according to HoREA, only one commercial housing project with 219 apartments was completed in the first quarter of this year.

Mr. Le Hoang Chau, Chairman of HoREA, predicted that this year, the Ho Chi Minh City real estate market would continue to experience an imbalance in supply and demand, with a focus on high-end housing. The supply of affordable and social housing remains scarce.

Anh Phương