Millennials Hesitant to Buy Homes in Outer Suburbs Due to Skyrocketing Prices

With the new year came a flurry of promotional “super cheap” home loan packages from banks, spurring Anh Quân (32, from Nghệ An) to restart his plans to buy an apartment. With a budget of just over VND 2.5 billion, Quân and his wife intended to purchase a two-bedroom apartment in Đông Anh district, financing nearly 40% through a bank loan. Despite working in the inner city, he was willing to consider properties in the outskirts, attracted by the more affordable prices, and eager to find a place to settle down.

When inquiring about an apartment project near Đông Trù bridge in Đông Hội commune, he was quoted prices ranging from VND 3.4 to 3.7 billion for a 68-73 sq. m unit (approximately VND 49-51 million per sq. m). The agent informed him that prices had stabilized over the past three months and that the seller would be willing to offer a discount of VND 50-100 million or free furniture if he was serious about buying.

In Vĩnh Ngọc commune, 7 km away, apartments in a project consisting of three buildings located near Nhật Tân bridge were priced higher, ranging from VND 56 to 61 million per sq. m. With a budget of less than VND 3 billion, the agent informed him that he could only afford a one-bedroom unit in this project.

“These two projects used to be considered affordable, with launch prices below VND 20 million per sq. m, but now, even with VND 2.5 billion, it’s a challenge to buy here,” Quân said.

Recently, there has been a significant increase in home-buying demand among young people. A survey by PropertyGuru Group found that the core group of home buyers are aged 22 to 39, replacing the previous dominant group of middle-aged people over 40. The common income range for this group is typically between VND 20 and 30 million per month.

Savills, a real estate service provider, also noted that individuals aged 25 to 35 are more likely to have the financial capacity to purchase a home. They are adaptable and flexible when it comes to location, willing to move to the outskirts to find affordable options. However, for many young people, the dream of owning a home is becoming more elusive as prices in Hanoi and Ho Chi Minh City continue to soar, even in peripheral areas.

Thu Hồng, a 30-year-old from Bắc Giang, faced a similar challenge when searching for a home in the outskirts with a budget of less than VND 3 billion. In Văn Giang district, Hưng Yên province, she found that in a subdivision that had been handed over three years ago, apartments ranging from 68 to 76 sq. m were offered at prices between VND 3.5 and 3.9 billion (approximately VND 51-52 million per sq. m). If she were to buy in a new subdivision and sign a contract directly with the developer, the apartment price could reach up to VND 62-64 million per sq. m.

Hồng also looked into a newly launched project 8 km away, located in the eastern metropolitan area. If she opted for a progressive payment scheme, the apartment price could go as high as VND 77-80 million per sq. m. With her budget of less than VND 3 billion, she could only afford a studio or a one-bedroom unit.

Real estate in eastern Hanoi. Photo: Ngọc Thành

According to observations, while apartment prices in Hanoi’s outlying districts have stabilized in the first four months of the year, they remain high. Resale prices in some projects more than 15 km from the city center exceed VND 50 million per sq. m, and even approach VND 60 million. Compared to the 2018-2019 period, when apartments in the outskirts were mainly in the affordable segment, ranging from VND 18 to 30 million per sq. m, the current price level has increased by 2 to 2.7 times.

In contrast, a recent survey found that over half of the 3,100 respondents could only afford to purchase a home for less than VND 2 billion.

Cao Thị Thanh Hương, a Savills expert, pointed out that young people under 35 have only been working for about ten years, which is not a long enough period to accumulate sufficient financial resources for a significant investment in real estate. Meanwhile, property prices in the capital have skyrocketed over the last decade, far outpacing the growth in workers’ incomes.

Considering the rate of increase in property prices, apartments in Hanoi have seen an average annual increase of 22% since 2020. In contrast, the average income growth rate for workers nationwide was recorded at only 8.6% in 2024, according to the General Statistics Office.

Data from Numbeo, the world’s largest cost of living database, indicates that as of Q1 2025, workers living and working in Hanoi would need to accumulate an average of about 24.7 years of income to be able to afford a property in the city.

According to Hương, owning a mid-range apartment has become challenging for young couples with average incomes unless they receive support from their families or access suitable credit packages. Many are forced to choose long-term rentals or accept multi-generational living arrangements to ease the financial burden.

After searching for apartments in the outlying districts, Quân decided to hold off on his purchase due to the high prices. Even with the bank’s promotional loan package, the short application period and potential fluctuations in floating interest rates could significantly impact his family’s financial situation. “The economy is still facing challenges, and many industries are cutting jobs. I’m not sure if my wife and I can maintain stable incomes over the long term to handle such a substantial loan,” he said.

Young people’s dream of owning a home needs a boost, said Phạm Đức Toản, CEO of EZ Property, as prices continue to outpace incomes. “Many borrowers who take out loans to buy homes find themselves in crisis when their cash flow becomes imbalanced, forcing them to sell their properties,” he added.

The government has recently instructed banks to research preferential credit packages to develop social housing and housing for young people under 35. According to the EZ Property CEO, for those under 35, owning a home requires a certain level of income and savings. While they are not averse to using financial leverage to realize their dream of homeownership, they are also more cautious about taking on debt.

Cao Thị Thanh Hương from Savills suggested that loan terms should be extended to 20-30 years, covering the entire working cycle of the borrower, to reduce the monthly repayment burden.

According to her, stable interest rates are crucial to maintaining borrowers’ peace of mind. Any fluctuations in interest rates can cause anxiety and affect their quality of life and their sense of settlement—a core factor driving their long-term commitment to a city and their contribution to its development.

Lê Hoàng Châu, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), shared a similar view, stating that with current incomes, most young people or middle-income earners can only afford to buy affordable housing projects priced between VND 2 and 3 billion per unit. However, this segment is becoming increasingly scarce, especially in Hanoi and Ho Chi Minh City, as developers show little interest in it.

“Creating mechanisms to facilitate home ownership for young workers in affordable housing will motivate real estate businesses to restructure their portfolios and invest more in this segment,” Châu said.