Real Estate

“Unleashing the Power of the ‘Invisible Hand’ in the Real Estate Market”

"Home ownership remains an elusive dream for many, with current income levels struggling to keep up with the rising costs of living and property prices. This is according to Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), who highlights the growing disparity between the haves and have-nots in the city's vibrant property market."

Administrator

25 August, 2025

At the Talkshow Mua nhà trả góp bằng lương [Home Purchase Installment with Salary] organized by Tuổi Trẻ [Youth] newspaper on August 22, Mr. Le Hoang Chau quoted an ancient concept from our ancestors with the saying: “Building a house, taking a wife, buying a buffalo” – considering owning a house as the first foundation. In the East, including Vietnam, this concept is still very strong because one must buy a house and own it to demonstrate a man’s capacity and to “settle down.”

However, there needs to be a change in perception, emphasized Mr. Chau. Renting a home nowadays is also a good option, especially in the context of urbanization and the strong development of technology. When choosing to rent a home that suits their needs, young people can more easily change jobs, move to another place, or even switch jobs. This is a common trend worldwide, and currently, the rental apartment market in Vietnam is also gradually being accepted by young people.

HoREA Chairman sharing at the Talkshow. Photo: TM

Increasing the taxable income of citizens

Currently, the State has policies on social housing. Recently, the National Assembly issued Resolution 23 and previously also introduced many pilot mechanisms to implement the housing policy, including Decree 192 to supplement previous regulations. Especially just a week ago, the Prime Minister directed agreeing with the proposal of the Ministry of Construction on raising the income standard for buying social housing. Accordingly, an individual can have an income of up to VND 20 million/month, and a couple can reach VND 40 million/month and still be eligible to buy social housing.

This is also one of HoREA’s previous recommendations. Previously, Decree 100 (in 2014) only stipulated an income range of VND 11-15 million. The government then adjusted it to VND 15 million. Now, the income standard has been raised to VND 20 million for individuals and VND 40 million for couples. Mr. Chau considers this an important step.

However, Mr. Chau also said that there are still some inconveniences in the actual implementation. For example, a person with a basic salary of VND 20 million/month meets the condition, but at the end of the year, they receive an additional 13th-month salary, causing their income to exceed the threshold and become ineligible. Or, if someone has an initiative, works overtime, and is paid a few million more, their total income also exceeds the standard and is disqualified. This is unreasonable. Therefore, the Association recommends that we must base it on the basic salary and not consider additional income from overtime work.

On the other hand, more than ten years ago, there was a business in Ho Chi Minh City that implemented a policy of selling commercial houses with an installment payment method within 60 months. This policy was very well received by the people. After that, many banks and investors also offered 30-year and even 40-year loan packages. However, most of these packages only offered preferential interest rates in the first year, and then the rates increased significantly. This makes borrowers very anxious. “I think there should be long-term loan packages of 25 to 30 years with stable and predictable interest rates, not like the current situation where banks only fix interest rates for the first few years,” said Mr. Chau.

The HoREA leader also mentioned that more than 20 years ago, there was a pioneer enterprise in developing affordable housing. Some projects cooperated with Japanese partners, which were well received by the people. This shows that when the interests of investors, banks, and buyers are harmonized, the market develops sustainably.

Regarding the State, in the past time, the National Assembly and the Government have issued many resolutions to remove difficulties for the market. Resolutions 66 and 68 to perfect the legal framework; Resolution 170 to handle the problems of thousands of projects; the National Assembly also passed a resolution to pilot allowing the conversion of agricultural land use purposes into commercial housing projects. Notably, the Government has directed the establishment of the National Housing Fund. This is a very positive signal, providing additional resources for developing social housing and low-cost commercial housing.

However, the current difficulty is accumulation. If a person saves VND 100 million a year, it will take 20 years to buy an apartment. Meanwhile, living expenses, education, and raising children are increasingly high. Mr. Chau suggested considering raising the personal income tax deduction level, for example, VND 18-20 million for taxpayers and about VND 7 million for each dependent, to increase people’s savings potential.

How does the “invisible hand” work in the real estate market?

Another issue is the supply. In the first six months of 2025, Ho Chi Minh City had only over 3,000 primary apartments for sale. In 2017, this number was 43,000. From 2021 until now, the city has not had any new social housing projects. This is the reason for the high house prices.

According to the law of competition, when there are many houses on the market, prices will drop, but if there is a shortage of houses, prices will continue to rise. At that time, there was a situation of “magic,” turning regular housing projects into luxury ones, directly damaging the economy. Because the benefits only focus on a small group of enjoyers, while social interests are not guaranteed.

Regarding the real estate market, Mr. Chau said that when the difficulties in the project supply are solved, the housing supply will increase. From there, enterprises will have conditions to restructure their products. Currently, the luxury real estate market is considered by many reputable international organizations to occupy too large a proportion, in which investors account for up to 60-70%, a significant figure. This shows an unsustainable development.

If there are more affordable and affordable housing sources on the market, high-end real estate developers will also have to adjust. At that time, the “invisible hand” of the market will take effect. Therefore, we believe that removing legal obstacles and unblocking the supply will positively impact the market.

The Central has set a target to basically remove legal obstacles for projects by the end of 2025 to unblock the supply.

The solution is to clearly distinguish between social housing and low-cost commercial housing. For low-cost commercial housing, according to Mr. Chau, it must operate under a market mechanism. In other words, there is no preferential tax treatment or credit policy for investors. The price of this type of housing is entirely determined by the market.

The State should support buyers through 25-30 year loan packages with a stable and predictable interest rate, not just preferential in the first year as it is now. This mechanism will enable young people and not only young people but also those with a real housing need to access it more easily.

In many countries, young people’s incomes double or triple in 10-15 years, so if there is a reasonable loan package, they can repay it ahead of schedule. Currently, some banks offer the advantage of allowing prepayment of VND 100 million or VND 200 million in a month without a penalty. This is a great benefit for young people. In addition, the current interest rate level is suitable compared to previous years.

Thu Minh

– 07:20 23/08/2025