An average-income earner has to save money for more than 50 years to be financially capable of buying an average-class apartment, a recent market study by CB Richard Ellis has found.
The market research, jointly conducted by CBRE and market researching firms TNS and Nielson, was aimed at figuring out how many years households in Hanoi and Ho Chi Minh City have to save up money in order to be able to afford an apartment.
The research was conducted under the assumption that households will annually set aside 19 percent of their full-year total income for a house purchase.
The study findings show that average-income households, who earn around VND160 million (US$7,680) a year, or VND13 million a month, have to save up for 30 years to be able to purchase a low-class apartment worth VND880 million.
It would take these consumers 51 years to have enough money to buy an average-class VND1.5-billion apartment, and as many as 96 years for a high-class apartment worth VND2.8 billion.
Meanwhile, households of the high-income class, whose annual incomes top VND480 million, also need to save for 10 years to buy a low-class apartment, while the respective time of saving for average- and high-class apartments are 17 years, and 31 years.
For their part, households who earn VND60 million annually have to save for 77 years to buy a low-class apartment, and 113 years for an average one. If they want a high-class apartment, they simply have to save up for 249 years, the study said.
Although the study is not a comprehensive reflection of the real market development, it can be inferred that it is not easy for consumers to purchase apartments with finance merely sourced from their annual incomes without borrowing from their relatives or bank loans, a source which is hard to access due to the high interest rate barrier.
According to CBRE, despite the fact that apartment prices have been on the declines for the last three years, the ratio between sales and unsold inventories has also constantly slumped since the first quarter of 2010.
Selling [apartments] has become a nightmare for investors, since consumers have lost confidence in the real estate market, the report said.
Figures recorded last year show that 5,000 apartments were marketed in the first quarter, but less than a half of them were consumed. Similarly, 4,900 new apartments were put on sale in the second quarter, but investors only managed to sell 1,400 apartments.
CBRE said the high-class apartment projects in the city’s downtown can still find customers, while other projects to be implemented in the future will target average-income earners, with prices expected to be less than VND21 million a square meter./.
