Recently, the topic of Vietnam's housing prices has become increasingly popular, especially with the data from Hanoi being quite alarming. The Housing Price-to-Income Ratio (HPR) can reflect whether a city's real estate market is overheating, and Hanoi's current situation is indeed worth deep consideration.

First, let's look at the numbers. Hanoi's current housing price-to-income ratio has soared to 27.7 times, significantly higher than the long-term average of 23.35 times, and it is the highest since the peak between 2016 and 2017. In other words, an average-income person would have to go without eating or drinking for over 27 years to afford a house, indicating a clear decline in buyers' repayment ability.

Why is this happening? There are several driving forces behind it. First, supply remains tight, especially in inner-city areas and places with good infrastructure, where demand still outstrips supply. Second, on the capital side, after the liquidity crunch from 2022 to 2023, money has started flowing back into real estate, particularly into well-defined property assets like condominiums, which have re-attracted households and long-term investors. Third, construction costs are rising—land, labor, and financing costs are all increasing, pushing up new home prices and subsequently boosting the secondary market.

Interestingly, Vietnam's housing prices share many similarities with China's. Vietnamese real estate accounts for 60-70% of household assets, with homeownership rates reaching about 90%, similar to China's dependence on property back in the day. But there's a key difference—Vietnam's urbanization rate is only 45%, far below China's 65-67%, meaning Vietnam still has significant room for housing demand growth.

A comparison with China makes this even clearer. The housing price-to-income ratios in China and Vietnam are superficially similar, both around 27 to 28 times, but their market structures are completely different. Since 2022, China's population has started to decline, leading to a severe oversupply—enough homes to accommodate 150 million people, with over 100k units completed annually. The crisis stems from excess supply, high leverage, and long-term bullish expectations. In contrast, Vietnam's population is still growing, urbanization is far from saturation, with only 100k units completed annually, and a shortfall of about 300k units, mainly in affordable and social housing sectors. Simply put, China is adjusting because it has too many houses, while Vietnam genuinely faces a housing shortage.

So, will Vietnam's housing prices experience a deep correction like China's? From a risk perspective, the rapid rise in the housing price-to-income ratio does pose hidden dangers—diminished buyer affordability, declining rental yields, and increased segmentation across projects and regions. However, the current credit environment is much more cautious than in 2016-2017, and the legal framework is stricter, meaning risks are more likely to be localized, affecting specific segments rather than causing a market-wide bubble.

The impact on different groups varies as well. For owner-occupiers, it is indeed becoming more difficult, but in the coming years, social housing projects are expected to somewhat ease this pressure, and dispersing population to suburban areas could help optimize construction costs. Investors, on the other hand, need to be more cautious, as the cash flow structure of real estate is changing, and capital appreciation expectations are less optimistic than before. The entire condominium market has already shifted from a growth accumulation phase into a cycle of higher valuation.

Overall, although Vietnam's housing price-to-income ratio is approaching pre-crisis levels similar to China, Vietnam currently does not have the structural conditions that would lead to a bubble burst. The key differences lie in supply-demand dynamics and demographic structure. The recent rise in housing prices in Vietnam may be more a normal fluctuation during urbanization rather than an irrational bubble. Nonetheless, close attention should still be paid to policy developments and market segmentation moving forward. What are your thoughts on this wave of Vietnam's housing market?