Vietnam's real estate market has experienced a staggering 59% price growth over the past five years (2019–2024), surpassing countries like the United States, Australia, and Japan.

For the average Vietnamese millennial, owning a 3-billion-VND ($122,000) apartment requires saving their income for 25.8 years - a stark indicator of the rising affordability gap.

Speaking at the Vietnam Real Estate Conference 2024 on December 3, economist Can Van Luc highlighted that recent legislative reforms on land and housing policies are expected to shape the market significantly in the coming years.

Nguyen Quoc Anh, Deputy CEO of Batdongsan.com, provided further insights, revealing that Vietnam’s five-year property price growth of 59% exceeds the 54% in the United States, 49% in Australia, 41% in Japan, and 37% in Singapore.

Despite the rapid price increase, Vietnam’s rental yield lags behind, averaging just 4%, compared to the 5-7% seen in countries like the Philippines, Malaysia, Thailand, Indonesia, and the U.S.

Quoc Anh attributed the price surge to Vietnam’s strong economic growth and inflationary pressures. With a GDP per capita growth rate of 34.8% - higher than the global average (20.8%) and other developing countries (22%) - Vietnamese consumers have increasingly turned to real estate as a preferred investment channel.

In contrast to volatile gold markets and modest returns from foreign currencies and savings accounts, real estate remains a stable investment. Over the past decade, average returns on apartments and land plots have soared by 197% and 137%, respectively, making property the best-performing asset class in Vietnam.

Despite the market’s potential, younger generations continue to struggle with homeownership. Data from Batdongsan.com revealed that:

In 2004, it took a Gen X individual 31.3 years of income to afford a 60-square-meter apartment priced at 600 million VND, with a savings rate of 7.4%.

By 2014, a millennial (Gen Y) needed 22.7 years of income to purchase a similar apartment, which had risen to 1.5 billion VND, while the savings rate dropped to 6%.

In 2024, a Gen Z buyer would require 25.8 years of income to afford the same apartment, now priced at 3 billion VND, despite a lower savings rate of 4.5%.

This growing affordability challenge highlights the persistent difficulty of homeownership for younger generations, even as interest rates have declined.

Despite these hurdles, property ownership remains a cornerstone of Vietnamese culture. Vietnam boasts one of the highest homeownership rates globally, at 90% - outpacing countries like Singapore (88%), Indonesia (84%), the U.S. (66%), and Australia (66%).

The preference for property ownership stems from cultural values, the perception of real estate as a stable investment, and the underdeveloped financial markets in Vietnam. Owning property is also viewed as a symbol of social status and a vital asset for family stability.

With legislative reforms and favorable economic trends on the horizon, Vietnam’s real estate market will likely continue to grow. However, ensuring affordability for younger generations remains a pressing challenge, requiring innovative policies and long-term solutions.

Hong Khanh