Monday , June 17 2024

Challenges for first-time homebuyers in HCMC


Young people cannot afford to buy a house in Ho Chi Minh City mainly because of the shortage of affordable housing and difficulty in getting credit, experts said.

Giang Huynh, deputy director of market research at real estate consultancy Savills Vietnam, said the housing market for millennials (those aged 25-38), especially in HCMC, faces challenges.

HCMC has long been a magnet for young people across the country, he said. According to Savills data, of the city’s population of 10 million, some 55% are young and 30% of this demographic have a need to buy a house.

But the challenge for this age group is that buying a home requires a high, stable income and a surplus to make a deposit.

A survey by Savills found that, without financial support from the family, the minimum income required to buy a house is VND30-45 million (US$1,270-1,900) a month.

Low supply of affordable housing

With their limited resources, young people usually target small apartments of 50-60 square meters in suburban areas.

But though this is a promising segment, supply is low. The ratio of apartments costing VND2-3 billion in the city is very low at less than 20%, and often it is even lower. Their prices are high too, according to Huynh.

Besides, she said, many property projects are embroiled in legal problems, further affecting supply.

According to data from real estate services firm Cushman & Wakefield, the average cost of an apartment in the mid-priced segment in HCMC with an area of 70 square meters and two bedrooms and two toilets is VND4-4.5 billion.

This is 16-17 times the average urban household income.

Ngo Quang Phuc, general director of Phu Dong Real Estate and Construction Group, said most young people looking to buy affordable housing have need for accommodation and are not investors, and so need bank loans.

But credit is hard to come by and the high interest rates, of around 13%, worry them, he said. He said banks need to lower their lending rates on retail loans.

Huynh said the government and developers should increase the supply of affordable housing.

Cushman & Wakefield said the affordable apartments segment is a settlement solution for young people living and working in urban areas.

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