THE ESCALATING HOUSING CRISIS IN HO CHI MINH CITY:

A COMPREHENSIVE ANALYSIS OF ORIGINS, IMPACTS, AND

POTENTIAL SOLUTIONS

INTRODUCTION
One of most Southeast Asian metropolises, Ho Chi Minh City, is wrestling with a
serious issue. According to some statistical data, the median home price in this city is
a staggering 32.5 times the median annual household income (Urban Land Institute,
2023), and the average price-to-income ratio for apartments in central Ho Chi Minh
City is a staggering 36, the highest among nine major Southeast Asian cities
(Numbeo, 2023). Renowned for its economic dynamism and rapid urbanization, this
has led to a paradox: its thriving growth is fueling a housing affordability crisis that
threatens to marginalize a significant portion of its residents. Soaring property prices
and rental costs, driven by relentless development, are making affordable housing
increasingly out of reach. This escalating crisis not only burdens individuals and
families but also impacts the city's economic future. This essay will delve into the
complex factors propelling this crisis, analyze its multifaceted impacts on both
individuals and communities, and explore potential solutions to mitigate its adverse
effects, ensuring that Ho Chi Minh City's growth benefits all its inhabitants.

SUPPLY AND DEMAND: UNDERLYING REASON OF RISING

HOUSING PRICES AND RENTS
The housing crisis in Ho Chi Minh City is a multifaceted issue arising from a
confluence of interconnected factors. On the demand side, the rapid urbanization of
the city has led to a substantial increase in the number of individuals seeking housing
(Gia Chinh, 2024), placing considerable strain on the existing housing stock.
Concurrently, on the supply side, inefficient land-use regulations have constrained the
availability of land designated for residential development, further exacerbating the
supply shortage (Tran & Nguyen, 2019). The influx of foreign investment has also
exerted upward pressure on property values, rendering housing increasingly
inaccessible for a significant portion of the local populace (Le & Pham, 2021). This
convergence of factors, characterized by escalating demand and constrained supply,
has precipitated a pronounced housing affordability crisis in Ho Chi Minh City.

RAPID URBANIZATION
The boom of urbanization due to migrants (Nguyen Quy, 2021) is core cause
resulting to the breakthrough of housing needs in Ho Chi Minh City.
 POPULATION DENSITY IN VIET NAM AND HO CHI MINH CITY
(person/km2)

5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
2011 2016 2021

Viet Nam Ho Chi Minh

Graph 01. Population Density (people/km²) (United Nations and General Statistics Office (VN),
2024)
The bar chart indicates the growth of population density in Ho Chi Minh and whole country
from 2011 to 2021. Remarkably, in one decade, the population in Ho Chi Minh City rose
significantly, leading to an increase of roughly 1000 people/km2 and peaked at approximately
4500 people/km2 in 2021. Conversely, this figure for the whole country increased modestly.
From that, it can be demonstrated that the housing crisis in Ho Chi Minh City was basically
caused by migrants.

Graph 02. Population Growth and Migration

Ho Chi Minh Ha Noi
Rates inHaVietnamese
Giang
Cities (2011-2021)
Gia Lai
201 202 201 201 201
2016 2011 2021 2011 2021 2016 2021
1 1 6 6 1
Natural population 12, 17, 12, 14,
7,4 7 9,8 11,8 8,8 9,8 15,1 11,4
growth rate (‰) 4 2 3 2
Migrants increase 11, 21,
6,6 4,7 2 5,9 -1,3 -2,5 -7,6 -1,9 -1,8 -5,4
rate (‰) 5 8
The table depicts the population growth because of natural rating and migrant in
cities in Viet Nam. Comparing to with other cities in Viet Nam, Ho Chi Minh
always has witnessed a highest total rating of population growth, primarily due
to migrants. Except to HCMC, it is easy to see the population growth in other
cities generally because of natural growth. The ratings for migrants in HCMC
typically were highest, far exceeding other cities even the capital of Viet Nam
such as Ha Noi, and even currently peaked at 21,8% (2021).

The surge in migration to Ho Chi Minh City is propelled by a confluence of compelling

factors. This city's allure as Vietnam's economic epicenter has attracted a continuous influx of
migrants seeking employment and educational opportunities (VnExpress, 2023; General
Statistics Office of Vietnam, 2020). Additionally, the promise of better living standards,
superior infrastructure, and access to quality education and healthcare further incentivizes
migration (Dang & Gibson, 2014). The desire for family reunification also plays a crucial
role, as existing social networks in the city attract newcomers (VnExpress, 2023; GSO,
2019). Furthermore, the presence of prestigious universities draws ambitious students from
across the country, seeking to enhance their educational attainment and future career
opportunities (Ministry of Education and Training, 2021). This amalgamation of economic,
social, and educational incentives underscores the complex dynamics underlying the
escalating migration rate to Ho Chi Minh City.

THE INEFFECTIVENESS OF POLICIES

The city's finite land resources, inefficient land-use and rent control policies have
severely constrained the development of new housing projects (World Bank, 2022).
This scarcity of developable land, coupled with cumbersome bureaucratic procedures
(World Bank Group, 2022), has stifled the construction of new residential units,
further amplifying the supply-demand mismatch. The scarcity has empowered
developers and landlords to exercise undue control over pricing, leading to unchecked
price inflation and speculative practices. Especially during peak periods, the pricing
brackets have witnessed an upward trend in demand as students and families seek
lodging, allowing landlords and agencies to exploit this heightened demand by raising
rental fees (CBRE Vietnam, 2023).

A CASE STUDY: EXAMINING THE INEFFECTIVENESS OF RENT

CONTROL DURING PEAK DEMAND
The VnExpress article highlights a stark reality in Ho Chi Minh City's rental market:
landlords are leveraging the post-Tet period to implement substantial rent increases,
with some raising prices by 15-20%. Specific cases, like Ms. Linh's 25% increase and
Ms. Xuan's 15% hike, illustrate this trend (VnExpress, 2024). This opportunistic
pricing, coupled with the existing challenges of limited housing supply and high
demand, underscores the ineffectiveness of current rent control mechanisms. The
absence of robust regulations to prevent such sharp increases leaves tenants,
especially those in vulnerable economic situations, exposed to significant financial
burdens. This situation not only exacerbates the affordability crisis but also
undermines the stability and security of housing for a significant portion of the city's
population.

IMPLICATION
 The escalating costs of housing in Ho Chi Minh City, both in terms of purchase prices
and rental rates, pose significant implications across various facets of the city. For
individuals, the affordability crisis is exacerbated as a larger proportion (exceeding
30%) of income is allocated to housing (ULI, 2023), leaving less disposable income
for other necessities and discretionary spending (Nguyen & Nguyen, 2023; General
Statistics Office of Vietnam, 2022). This financial strain can lead to increased debt
and financial insecurity, negatively impacting overall well-being (Vietnam Bank for
Social Policies, 2022). Consequently, it pushes people's dreams of owning a private
house in Ho Chi Minh away (Dan Viet, 2017).

FINANCIAL PROBLEM: When an individual averagely able to own a

house in Ho Chi Minh city

Graph 03. Median apartment price in Viet Nam, 2023 (Dat Nguyen, 2023)

The chart starkly highlights the relative unaffordability of housing in Ho Chi

Minh City when compared to Da Nang and Hanoi. While Da Nang boasts a
thriving tourism industry and Hanoi serves as the political capital, both cities
demonstrate significantly lower median apartment prices than HCMC. This
contrast underscores the exceptional challenges faced by individuals and
families aspiring to own a home in Ho Chi Minh City, where the median
apartment price exceeds $296,000 - dramatically higher than Da Nang's
$214,540 and Hanoi's $182,290. This led to a huge question about the financial
challenge of homeownership in Ho Chi Minh City.
According to recent reports, the median home price in the city is a staggering 32.5 times the
median annual household income (The Investor, 2023). This alarming statistic highlights the
severe affordability crisis faced by residents. Even with a median house price exceeding
$296,000, far surpassing the average annual household income of just $9,110 (Dat Nguyen,
2023), the prospect of homeownership remains a distant reality for most. At the current
median house price and annual income, it would take an average person approximately 32.49
years to save up for a house in Ho Chi Minh City, assuming they dedicate their entire
income solely towards this goal, excluding all other essential living expenses such as
food, transportation, and utilities. In another aspect, a report indicated that more 55%
young people desired to own a house in Ho Chi Minh City (Nguyen Tieu, 2023). With this
status, gradually, it has resulted in the dissatisfaction in large number of local residents. This
financial burden not only affects individuals' ability to secure housing but also raises
concerns about the long-term sustainability and inclusivity of the city's housing market.

ITS IMPLICATION ON COMMUNITIES

At the societal level, the growing disparity between homeowners and renters in HCMC is
amplified. As property values in prime locations like District 1 and District 2 appreciate,
homeowners accumulate wealth, while renters, often younger individuals and low-income
families, face escalating costs and diminishing housing security (CafeF, 2024). This widening
disparity can foster social unrest and resentment, potentially destabilizing communities
(Walks, Dinca-Panaitescu, & Simone, 2016).

From a macroeconomic perspective, the consequences for HCMC are equally

profound. First and foremost, as a greater percentage of income has been expenditure
on housing (Huynh & Truong, 2024), rising housing expenses may be the primary
cause of the decline in consumer spending on neighbourhood companies and services
(Mian & Sufi, 2014). This reduced consumption can dampen the city's economic
vibrancy and potentially hinder its development goals (World Bank, 2022).
Furthermore, high housing costs can deter skilled workers and professionals from
relocating to HCMC, potentially limiting the city's ability to attract talent and drive
innovation (Savills Vietnam, 2023).
BRIDGING THE GAP: AFFORDABLE HOUSING SOLUTIONS FOR
HO CHI MINH CITY
In order to alleviate the growing housing issue in Ho Chi Minh City, a comprehensive
strategy that incorporates both private and governmental action is imperative to shrink
the disparity of demands and supplies.

In the short term, raising awareness among housing owners about striking a balance between
their benefits and sharing love with less fortunate individuals can play a crucial role. This
approach can encourage homeowners to offer affordable rentals or participate in shared
housing initiatives, thus increasing housing availability for low-income residents (Nguyen &
Pham, 2024). Simultaneously, government incentives for affordable housing projects can
provide immediate relief to those in need (Tran, 2022). These incentives could include tax
breaks for developers, subsidies for low-income buyers (Kemp, 2007), and expedited
approval processes for affordable housing projects (National Association of Home Builders,
n.d.; City of San Diego, n.d.).

In the long run, investing in public transportation infrastructure can decentralize

housing demand and alleviate pressure on urban areas (Le, 2021). Improved
connectivity can make suburban areas more accessible, leading to a more even
distribution of housing demand across the city. Moreover, enforcing stricter
regulations on land speculation can curb price inflation and ensure a more equitable
housing market (Pham, 2020). These regulations could include higher taxes on vacant
land (World Bank, 2021), restrictions on foreign ownership, and greater transparency
in land transactions (UN-Habitat, 2019).

To effectively implement these solutions, cooperation between government officials,

corporate developers, and community organizations is key. By working together,
these stakeholders can pool resources, expertise, and knowledge to address the
complex challenges of the housing crisis. In essence, any solutions need to
prioritize sustainable urban development principles.

CONCLUSION
In conclusion, the escalating housing crisis in Ho Chi Minh City stems from an
imbalance between housing demand and supply, exacerbated by rapid urbanization
and limited land. Short-term measures such as incentivizing affordable housing and
shared accommodations can offer temporary relief. However, sustainable solutions
require a comprehensive approach that prioritizes restoring equilibrium to the housing
market, which involves investing in public transportation to decentralize demand,
implementing stringent regulations on land speculation to curb price inflation, and
fostering collaboration among government, private sector, and community
stakeholders to pool resources and expertise. Addressing this crisis urgently and
strategically is crucial to ensuring affordable, secure housing for all residents and
safeguarding the city's economic vitality and social well-being.
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