Vietnam battles housing bubble

Overseas Property | 7 Jan 2021

The deputy prime minister of Vietnam, Trinh Dinh Dung, claims to be preventing a property price surge as the market is showing signs of a housing bubble, Vietnam media Thanh Nien reported.

Vietnam has become a new favorite for investors in recent years, resulting in rising property prices that the local government saw potential risks in.

Trinh said at a government meeting that property prices should not be allowed to soar to the point of a property bubble.

He pointed out that authorities must do well in predicting the relationship between housing supply and demand so that it can respond to the situation and development of the property market with timely measures that can stabilize the market and prevent a rapid rise in prices.

Figures from the Vietnam ministry of construction showed that home prices have been rising as supply decreased year on year. The price of an apartment in Hanoi rose 0.16 percent quarter on quarter in the third quarter last year, whilst that of a house rose 0.01 percent.

In Ho Chi Minh City, the price of an apartment was up 0.25 percent and house prices rose 0.15 percent despite the economic impacts brought by Covid-19.

The general director of real estate company Truong Phat, Nguyen Van Dung, noted that the prices of residential projects are still on the rise.

Home prices in District 9 of Ho Chi Minh City are at 60 million Vietnamese dongs (HK$20,000) per square meter, while the price in Thu Duc District is 80 million dongs per sq m. In District 2, the price per sq m has been pushed up to 120 million dongs.

Statistics from Vietnamese human resources company Navigos show that the ratio of property prices to income in Ho Chi Minh City and Hanoi has begun to expand.

The average annual salary of fresh graduates in the two areas is 72 million dongs, but the average price of a two-bedroom unit has reached two billion dongs, a ratio of 28 times.

Even if the average annual salary of management personnel is 264 million dongs, the property price is seven times their annual salary.

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