The real estate market is witnessing a continuous surge in property prices, while supply remains largely unchanged. New projects on the primary market often have average prices above VND 70 million/sqm, with some projects even surpassing VND 100 million/sqm.
Meanwhile, apartments priced below VND 50 million/sqm have almost “disappeared” from the market, both in inner-city and suburban areas. Skyrocketing property prices make it increasingly challenging for young people with limited finances to own homes in major cities like Hanoi and Ho Chi Minh City.
Recognizing this issue, the Prime Minister has instructed the State Bank of Vietnam (SBV) to explore special credit packages exclusively for individuals under 35 years old, aiming to boost both supply and demand in the social housing segment. These loan packages offer a glimmer of hope with initially low-interest rates, ranging from 3-5%, and longer preferential periods compared to regular loans, which typically offer promotions for only 3-6 months.
Regarding this credit package, Ms. Nguyen Thi Hong, Governor of the SBV, shared that within the framework of the VND 145 trillion package and the youth support program, nine banks have registered around VND 45-55 trillion with interest rates 1-3% lower than usual, amounting to approximately 6.1-6.6%/year for a duration of 15 years. However, Ms. Hong emphasized: “Most young people nowadays prioritize renting over buying, so it’s essential to reassess actual demands to adjust policies accordingly.”
Although low-interest rates are a positive sign, many young people remain concerned about the high property prices, making monthly repayment pressure a heavy burden. To purchase a two-bedroom apartment of 60sqm in Hanoi or Ho Chi Minh City, priced at VND 3-3.5 billion, one would need over VND 1 billion in savings, with the remaining VND 2-2.5 billion financed through loans. With a 6.5%/year interest rate, the monthly repayment would be VND 21-23 million, almost equivalent to the average income of VND 25-30 million for a young couple.
Financial principles dictate that housing expenses should not exceed 30% of one’s income, implying a necessary income of VND 90 million/month to maintain balance, a figure far beyond the reach of most young people. Post-preferential interest rates can climb above 10%/year, further exacerbating the risk of falling into a debt spiral.
On social media platforms, young individuals express their concerns. Anh Hoang, a 29-year-old engineer from Hanoi, shared, “I considered taking out a loan to buy a house for stability, but the calculations for post-preferential repayments are too risky. My current income isn’t enough for me to take on such a commitment.”
Chi Huong, a 31-year-old working in Ho Chi Minh City, echoed similar sentiments: “The post-preferential interest rates are a significant burden. If the economy takes a turn for the worse or I lose my job, my family could easily fall into debt.” Conversely, some young people propose solutions. Nam, aged 27, shared, “I’m looking at projects in the outskirts to reduce the pressure and aim to save up 40-50% of the property price beforehand.” Linh, 30, hopes for “fixed-rate loans over an extended period, which would ease the tension for young people like me.”
Mr. Vu Cuong Quyet, CEO of Dat Xanh Northern, offered practical advice: “In the past, when property prices were lower, having 30% of the capital and borrowing 70% was sufficient. But now, with higher prices, homebuyers should aim for at least 50%, or even 70%, of the property’s value before purchasing, borrowing a maximum of 50% to reduce financial pressure and mitigate risks associated with rising interest rates.”
According to the Vietnam Real Estate Brokers Association, taking out a loan to buy a house when one’s finances are not stable can lead to prolonged debt. After the preferential period, the interest rates surge, causing many borrowers to default, forcing them to sell their properties at a loss, impacting their daily expenses and future plans.
Given this situation, young people must carefully consider their options before taking out a loan to buy a house. One solution is to explore real estate in outlying areas, where prices are more reasonable than in the city center. Saving up 30-50% of the property’s value before taking out a loan can also alleviate repayment pressure. If borrowing is unavoidable, it’s crucial to factor in post-preferential interest rates and seek additional sources of income to ensure long-term repayment capability.
Regarding government and business responses, experts suggest implementing more practical support policies. In addition to promoting social housing, developing a long-term, low-cost rental housing fund, and offering low-interest, fixed-rate loan packages are urgent solutions. Developers should also strike a balance between profits and actual demands, focusing on affordable and mid-range housing segments to cater to the majority of the population.
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The Youth Advantage: How Businesses Can Lower Interest Rates and House Prices for Buyers Under 35.
“There is a growing consensus that introducing special housing loans for individuals aged 35 and under could significantly enhance their welfare. However, the question remains whether these loans should be offered through dedicated funds or integrated into existing preferential credit packages.”
