3 PUSHES FOR THE HOUSING MARKET IN VIETNAM

3 PUSHES FOR THE HOUSING MARKET IN VIETNAM

02/09/2016 00:09|INDUSTRY NEWS

The highest urban population in Southeast Asia, the growing middle class and the gradual improvement in income in the manufacturing and services sectors are the basis for expecting the breakthrough of Vietnam's housing market. Male in the future.

According to a research report on Potential of real estate for sale in Vietnam published by Jones Lang LaSalle (JLL), the real estate market is facing three opportunities to break out in the next one to two decades.

The urban population is the highest in Southeast Asia

The World Bank expects every year the urban population in Vietnam will increase by about 2.4% until 2025, reaching the highest rate in ASEAN. Demographic factor increased from 66 million in 1990 to 91 million in 2016, making Vietnam the third most populous country in the region, second only to Indonesia and the Philippines. Within the next 2 decades Vietnam will enter a period of golden population. The percentage of labor in the service and manufacturing sectors will grow strongly. With 25% of the population aged 10-24 and the average age of about 30, the housing market in Vietnam promises to welcome a huge source of demand (housing demand), affordability.

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Gold population factors, middle class growth and improved incomes are forecast to be a big boost for the housing market in Vietnam. Photo: Vu Le

 one month and the top 20% of households have the highest income of about 1,340 USD per month. Only families in the top 20% are able to buy most of the apartment segments developed by different developers.

The middle class is thriving

According to the Brookings Institution, Vietnam is the country with the fastest growing middle class population in Southeast Asia. This class is expected to grow at an annual rate of 18% for the period 2016-2020 compared to 15% for the 2005-2015 period. JLL believes that the strong development of the middle class is a solid premise for the output of the housing market. Because, this group of people has a high and stable income and the highest housing demand.

Income in the field of production - services improved

According to this report, Vietnam's economy has 47% of the labor force in agriculture, fisheries and mining compared to 28% of ASEAN countries. Particularly, the proportion of labor in the manufacturing - service sector has increased significantly over the past two decades, from the 19% milestone now to 32% in Vietnam. This index is expected to continue to increase in the next 10 years, which is an important basis to promote the growth of people's income.

With these potentials, the residential housing market is forecasted to grow steadily in the new cycle.

In the period of 2016-2018, the price of apartments is expected to increase on average 5-7% a year, particularly cheap apartments can accumulate an additional 10% per year, equivalent to an increase of 30% in the next 3 years. JLL said that this rate of increase is quite reasonable and acceptable in Vietnam market. Even if the apartment price increases by 30% in the next 3 years, the ratio of house price to income will still be stable because the income level has increased by 10% per year in recent years.

However, according to World Bank data, urban households in Vietnam have an average income of about 460 USD

For households outside the above income line, the World Bank assessed that it is only possible to pay when there is a policy to reduce mortgage interest rates to 5% compared to the normal interest rate of 7.5. -ten%.

Vu Le

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