The Risk of a Generation with Multiple ‘Nones’: No Homes, No Marriages, and No Competitiveness due to Land Auction Scandals like “Thu Thiem”, Driving Real Estate Prices to Abnormal Heights

Virtual Waves Caused by Unusually High Land Auction Frenzies

A land auction in Tien Yen, Hoai Duc District, Hanoi, ended in the early morning today after 18 hours with 19 plots of land successfully sold. The highest winning bid reached VND 133.3 million/m2, 30 times the starting price, while the lowest was VND 91.3 million/m2, 12.5 times the starting bid.

These winning bids are two to three times higher than the prevailing market rates, as according to PropertyGuru Vietnam, the average asking price for land in this commune in the last quarter was VND 43 million/m2, having already increased by over 48% in the past year.

This phenomenon of land price surges is not unique to Hoai Duc but has also occurred in Thanh Oai District, where land auction prices a week earlier ranged from VND 63 to VND 100 million/m2, 2.3 to 3.7 times higher than the prevailing market rates.

Mr. Dinh Minh Tuan, Director of Property Guru, expressed concern about the negative impact on the real estate market and the economic development of the localities due to the sudden surge in land prices during these auctions. The high auction winning prices will push up land prices in the surrounding areas, creating a new and uncontrollable price level. Local landowners tend to increase their asking prices to keep up with the market, further escalating local real estate prices.

Sharing the same concern, Prof. Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, also stated that the auction winning prices for land in the outskirts of Hanoi, 30-40km from the city center, exceeding VND 100 million/m2, are abnormal.

The expert also pointed out the irony of many shuttered storefronts in the center of Hanoi due to the rise of e-commerce, while land prices in the suburbs are skyrocketing, indicating the influence of real estate investors. This has led to land speculation, with people buying land and leaving it idle, hoping for a price surge instead of investing in development.

“Land prices in the suburbs are being pushed to such high levels that they are out of reach for ordinary people,” asserted Mr. Vo.

Concerns About a Generation Unable to Afford Housing

The real estate market has witnessed the relentless rise in Hanoi property prices. Prices have been increasing month by month, even day by day. In some cases, apartment prices have surged by 50-100% just in the past two years. And since the Hoai Duc and Thanh Oai land auctions, prices have skyrocketed even further.

Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan.com.vn, noted that the average price of apartments in Hanoi’s outskirts has reached VND 60-80 million/m2, while in the inner city, it stands at VND 150 million/m2. Five years ago, this was the average price of apartments in Ho Chi Minh City. Today, apartment prices in Ho Chi Minh City have soared to VND 150 million/m2, and in some areas, even VND 200 million/m2.

With real estate prices already high due to limited supply, the impact of land auctions has further pushed prices up, worrying many that house prices will continue to rise sharply by the end of the year. There are concerns that if this relentless increase in property prices is not controlled, it will have far-reaching consequences for society, including an entire generation being unable to afford homes.

Amid the pressure of soaring house prices, the story of a young person born in 2005 who has lived in Hanoi for a while and interacted with long-term residents about buying a house also caused a stir in public opinion: “There will be a generation that can’t afford a house…. It’s almost impossible for a regular office worker to buy a house. Sometimes I wonder how much more I need to learn and work to be able to afford one…”

In reality, without financial support from their families, the minimum income required to buy a house is VND 30-45 million per month. Meanwhile, the average income of young people is currently around VND 10-15 million per month. Without family support, it is challenging for young people to buy a house because it usually takes until they are 30 years old to reach a salary of VND 30-40 million per month. Moreover, from graduation to the age of 30, land and house prices may increase rapidly, not just stopping at VND 3 billion but possibly rising to VND 8-10 billion.

Discussing the impact of rising house prices on young people’s lives, Shark Nguyen Xuan Phu, Chairman of Sunhouse, said: “The nature of real estate prices is a recorded value, while the value in use does not change. A house that used to cost VND 1 billion now costs VND 11 billion, but the value in use has not increased. However, it puts pressure on salary costs, which account for a large part of the product and service price structure.”

Skyrocketing House Prices Lead to “Marriage Hesitation and Low Birth Rate”

Soaring house prices are not only pushing the dream of homeownership further away for young people but also affecting aspects of life that are supposed to be natural, such as marriage and having children. A recent quick survey on the VTV24 fanpage about the reasons for wanting to get married after the age of 30 showed that 62% of the nearly 400,000 young participants chose to marry after 30 because they still have worries about livelihood.

The Vietnam Association of Real Estate Brokers (VARS) also noted that more and more young people are “reluctant to marry and hesitant to have children” because of high house prices. This stems from financial concerns, and these worries are greatly influenced by house prices. When house prices continue to rise, so do rental prices, putting pressure on people’s living expenses. Many young people think that they must buy a house before getting married or having children, but because house and land prices are currently soaring, they have to work tirelessly to be able to buy a house, neglecting the “golden time” for marriage and childbirth.

Monthly rent and living expenses consume almost the entire salary, causing many young couples to dare to have only one child or delay having children. In reality, Ho Chi Minh City, where house prices are the highest in the country, is also the city with the latest marriage age and the lowest birth rate in the country.

From 2016 to 2018, house prices in Ho Chi Minh City continued to rise and set new records. During this period, Ho Chi Minh City also had the highest spatial cost-of-living index (SCOLI) in the country.

Since 2019, while Ho Chi Minh City’s house price growth has slowed down, Hanoi’s house prices have continued to rise. Hanoi has also “risen” to become the city with the most expensive cost of living in the country. At present, the movement of apartment prices in Hanoi seems to be following the path of Ho Chi Minh City five years ago. The average price in Hanoi has also reached VND 80 million/m2, close to the price recorded in Ho Chi Minh City. The marriage age in Hanoi is also getting higher, along with a declining birth rate.

According to experts, the high cost of housing is causing young people to “hesitate to marry and be reluctant to have children,” leading to a shortage of young human resources, a decrease in the workforce and labor productivity, and an increase in social security burdens. Especially with regard to the aging population and the care of the elderly, in the next three decades, Vietnam will have more than 30 million elderly people, accounting for about 25% of the population.

It can be said that high housing prices are causing a series of consequences for a generation of young people. In particular, a series of recent auctions with abnormally high winning bids and many suspicious signs have raised concerns about the risk of a second “Thu Thiem bomb.” Along with this, the ripple effects of land price surges in auctions will push prices up, taking away the opportunity for millions of people to own homes. Finally, it will cause instability in the market and society, undermining the government’s efforts to ensure social security and reduce housing prices.