Chairman Nguyen Quoc Hiep: Land Prices Account for 30% of Home Costs; Saving 1/3 of Monthly Income Would Take Over 80 Years to Afford an Apartment

Speaking at the seminar “Vietnam’s Real Estate Market: Identifying Inefficiencies and Solutions,” Mr. Nguyen Quoc Hiep, Chairman of the Vietnam Association of Construction Contractors (VACC) and Chairman of GP Invest’s Board of Directors, emphasized that land prices currently account for a disproportionately large share of housing costs, making homeownership increasingly unattainable for the average citizen.

Mr. Hiep cited the price-to-income ratio to illustrate the significant disparity between average incomes and property prices.

“For an individual with an average income, it would take 28.3 years to purchase a typical apartment if they allocated their entire salary. If they could only save one-third of their income, this period could extend beyond 80 years, making homeownership nearly impossible within a lifetime,” he stated.

According to Mr. Hiep, these figures starkly highlight the imbalance between disposable income and real estate prices, underscoring the need for more rational land and pricing policies.

The VACC Chairman attributed the primary issue to the cost structure of real estate, where land expenses constitute the largest component: “Land costs typically represent about 30% of a project’s selling price, and in some cases, even more. While construction costs have risen marginally, land prices have fluctuated dramatically.”

Additionally, the Chairman of GP Invest noted that land valuation methods in many localities remain inadequate. In some instances, auction prices of small plots are used as benchmarks for entire multi-hectare projects, artificially inflating values. He advocated for more specific guidelines and legal frameworks to accurately reflect the true value of land in different areas.

From a market perspective, housing supply remains scarce, particularly in major cities, while demand continues to grow. “Hanoi has seen virtually no new housing projects progressing on schedule recently, resulting in a significant supply-demand mismatch,” he remarked.

Furthermore, he addressed the issue of local administrative capacity, suggesting that bureaucratic systems need strengthening to manage the increasing workload. “A ward office with just over a dozen staff handling hundreds of project files—spanning planning, land, and finance—is inevitably overwhelmed,” the GP Invest Chairman shared.

He believes that enhancing local capacity and processes will expedite investment preparation, facilitating faster housing project launches.

Mr. Nguyen Quoc Hiep concluded that sustainable real estate market development requires addressing three key factors simultaneously: reasonable land prices, stable credit flows, and effective governance.

“When housing prices accurately reflect real value and align with citizens’ incomes, the market will naturally stabilize,” he emphasized.