Ms. Do Thu Lien (from Hai Duong province) said that she and her husband have been renting an apartment in the new urban area of Duong Noi, Ha Dong district (Hanoi) for over a year now. The apartment is about 60m2 and the rent is 7 million VND per month. The contract is signed for 12 months. At the beginning of this year, when the lease contract expired and they signed a new one, Ms. Lien was worried because the landlord informed them that the rent would increase starting from March, with an additional 500,000 VND per month.
“I have two young children who are studying in elementary school. The income of the two of us is just enough to cover the children’s education and basic living expenses. Now with the increased rent, I feel a heavy burden right from the beginning of the year. So our previous concern about the increase in rental prices has become a reality,” Ms. Lien said.
According to Ms. Lien, to avoid the risk of continuous rent increases, in this lease contract, she tried to negotiate with the landlord to extend the contract period to 2 years each time and the condition is that she has to pay 3 months’ rent at a time, instead of monthly payments as it is now.
Many landlords are raising the price of rental apartments. (Illustrative image: batdongsan.com).
Similarly, Mr. Tran Tien Hung (from Ha Nam province) and his wife, who rent a house in the Thanh Pho Giao Luu urban area (Bac Tu Liem district), also said that two years ago, the initial rent was 7.5 million VND for a 70m2 apartment, fully equipped, “just come in with your suitcase”. However, at the beginning of this year, when the lease was due for renewal, the landlord announced an additional 1 million VND to “match the market level”.
Mr. Hung and his wife had to accept this because they have gotten used to living here and he has made efforts to inquire at many places but everywhere is expensive. “This year, the economy is difficult, everything is getting more expensive, and incomes are just the same or even decreasing. The rental fee is really a burden for me and my wife. It’s also difficult to buy a house at this time, so we have to find a way to make it work,” Mr. Hung shared.
In a recent market report, Savills stated that the rental prices for all service apartments in the two major cities, Hanoi and Ho Chi Minh City, will increase in 2023.
In Ho Chi Minh City, the highest increase is in Class C with 8%, followed by Class B at 5% and Class A with a 3% increase. The average rent for service apartments is 516,000 VND per m2 per month, a 3% increase year on year.
In Hanoi, the rent for service apartments in 2023 is 580,000 VND per m2 per month, a 1% increase year on year. The occupancy rate is 83%, in which Class A has the highest growth rate with 4% per quarter.
According to the Consumer Sentiment Survey (CSS) report by PropertyGuru, high house prices and difficult economic situations are expected to increase the trend of renting in the first half of 2024.
Among the types of real estate, condominiums are the most popular (43%), followed by private houses (18%) and rental houses (18%). Only a small portion (9%) are interested in rental townhouses.
Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, also analyzed that many customers do not have enough money to buy a house, so they will rent or some groups will rent and sublet to serve domestic tourism.
On the other hand, the increasing urbanization trend and the influx of people into the city center have led to an increase in the demand for rental apartments and boarding houses; the rental market has become more vibrant than before.
“High demand will lead to an increase in rental prices. If the supply of new projects remains scarce, causing house prices to increase, people will tend to listen and shift from buying to renting more,” Mr. Dinh said.
Mr. Le Bao Long, Strategy Director of PropertyGuru Vietnam, believes that for investors with long-term vision, rental apartments are still an attractive investment channel because the average return on investment is high (including the price increase over time and rental profit), at around 12.5% per year. This is a good and stable profit compared to many other investment channels such as stocks, gold, foreign currencies, land, and savings accounts…
“Access to condominiums is becoming more and more difficult as the speed of income growth cannot keep up with the speed of housing price increases. In the future, primary condominium projects will have high prices because developers have to maximize their profits when costs are pushed up. This partly explains the current trend of many young families renting houses,” Mr. Long analyzed.
