Workers’ incomes are not keeping up with the pace of rising house prices
The Ministry of Construction announced that in the fourth quarter of 2023, apartment prices continued to rise in Hanoi and Ho Chi Minh City, especially in central areas. In the market, there are almost no projects in the affordable segment (priced below VND 25 million/m2), mainly in the mid-range segment (priced from VND 25 – 50 million/m2).
 Ho Chi Minh City
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According to Savills, the supply of primary apartments recorded 10,700 units in 2023 – the lowest level in 10 years. In the context of scarce supply and expensive house prices, the market only had 6,200 transactions in 2023. As a result, the number of apartment transactions decreased on average by 7% per year over the past 10 years.
According to a report by the General Statistics Office, the average income of Vietnamese workers in 2023 was VND 7.1 million/month, an increase of 6.9% compared to the previous year.
To buy an apartment for VND 1.5 billion with an income of just over VND 7 million/month (equivalent to about VND 85 million/year), it would take buyers 18 years. In the case of higher income, from VND 15 – 20 million/month, it would still take 6 – 8 years (assuming the worker uses the entire income to buy a house).
In reality, there are almost no new apartments available for purchase in the price range of VND 1 – 1.5 billion, making it almost impossible. The data shows that new supply is scarce and house prices are being pushed up while worker incomes are not keeping up with the pace of rising house prices.
A safe and reliable choice like old apartments
 Old apartments in Ho Chi Minh City
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Faced with the rapid increase in prices as well as concerns about the risks of buying newly launched apartments, many people choose to buy old apartments. Ms. Thanh (28 years old), an office worker, bought a 2-bedroom apartment with an area of 78m2 in Tan Phu District, which has been built for more than 6 years, close to her workplace, not too far from downtown.
According to Ms. Thanh, when she wanted to buy a house, she also visited ongoing projects, but she was concerned about the legal aspect of whether some projects could get the pink book (the certificate of ownership) on time or not. Therefore, she only chose projects that already had the pink book, even if they were old apartments; when she got married, she would switch to buying land for living and have more living space for her growing family.
“When deciding to buy an old apartment, my first priority is safety when living alone, followed by choosing an apartment that already has the pink book and is located in an area with enough facilities such as schools, markets, hospitals…” Ms. Thanh said.
In addition, Ms. Thanh said that the price of old apartments is also cheaper than the newly launched apartments, about 20 – 30% cheaper. With her savings and additional support from her family, she decided to buy a suitable old apartment within her budget.
With Mr. Kien (40 years old) and his wife, who have a limited budget, an old and long-standing apartment is not a bad choice. Although the house is not as luxurious as the new apartments, it will be safe and suitable for their circumstances. Apartments with the pink book are also easier to buy and sell in the future.
Mr. Binh (33 years old), who has a three-generation family, also bought an old apartment near Viet Han Avenue, Binh Tan District, which was completed in 2011. He was introduced to a newly built apartment in Go Vap District with a similar price, but he refused because it did not have the pink book like the old apartment. His parents are very meticulous, so they are afraid of the legal issues of the project if it cannot deliver the pink book.
Hoang (31 years old) and his wife are currently renting an old apartment near Thủ Đức wholesale market. He was introduced to a new apartment not far from there, but he declined. He said that the old apartment is closer to his workplace, only 2 – 3km away from the new place, but if you consider the time spent in traffic jams, it would take an extra 20 minutes to commute. Not to mention that the old place has already formed a stable community, so Hoang is also reluctant to move to a new place.
As can be seen, old apartments still have certain advantages that make many people still searching to buy despite the continued release of new apartments in the market. Especially considering the context of rapidly rising house prices in recent times.
Are old apartments the solution?
According to experts from Nha Tot, the advantage of old apartments is that they have already been formed, helping to address one of the most important issues that buyers are currently facing: trust.
“When buying a second-hand apartment, buyers can clearly see its actual shape after the project is completed, from which they can have a more comprehensive and detailed evaluation of the apartment. This helps them choose an apartment that suits their needs and trust in the quality of the finished construction,” said experts from Nha Tot.
In terms of supply, Nha Tot said that in Ho Chi Minh City, both the supply of old and new apartments have witnessed a decline in the past 6 months, with an average decrease of 9% and 11% respectively.
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New primary apartments: Apartments handed over from 2023 – 2024, newly handed over from the developer, no previous transactions accounting for more than 20% of the project. Older secondary apartments: Apartments handed over from 2015 – 2022, no new launches in the past 3 years. |
However, regarding new supply, when comparing the second half of 2023 and 2022, the supply of new projects increased by about 11%, while old apartments experienced a sharp decrease of about 38%.
Based on the data from Nha Tot, buyers tend to be more interested in older apartments. According to a survey on the attractiveness of listings, 36% of listings for old apartments attracted high levels of contact and interest from buyers, while this number was 30% for new projects (as of February 2024).
As can be seen, although the supply of apartments in Ho Chi Minh City has not shown many positive signs, buyers are still very interested in buying old apartments because they can have a clear picture of the actual shape and living conditions, as well as the surrounding infrastructure.
In terms of prices, the average price in the past 6 months of large-scale projects with both old and new supplies has recorded a price difference of VND 22 million/m2. Although the gap has narrowed each quarter, it is not significant. The reason is that the new supply of projects in central areas and big cities is becoming more scarce, making the old apartment market more lively. At the same time, given the difficulties still facing the market, homeowners and investors have lowered their expected profits to create opportunities and attract property buyers.
What should be considered when buying old apartments?
When considering buying an old apartment, there are several key points that need to be taken into consideration, including the status of the pink book.
Before making a decision, buyers should check whether the project has the pink book or not. If not, buyers need to assess the vibrancy of the buying and selling market and contact the developer to inquire about the expected time of acquiring the pink book. This is crucial because not all completed projects have the pink book, according to Nha Tot.
In addition, it is advisable to inquire about the surrounding infrastructure of the project, as well as the management of the building. Buyers may also ask residents who have lived in the project about these aspects as well as the living environment, amenities, and the local community.
Buying old apartments has the advantage of knowing the actual shape of the apartment after the project is completed, which helps buyers have a more comprehensive and detailed evaluation. On the contrary, if buying a new project, buyers need to imagine the project abstractly, such as the sunshine direction, wind direction, infrastructure, landscape… without actually knowing if the developer can meet their commitments.
