Should you rent or pay a mortgage on Saigon apartments?

In the time when housing market witnesses constant up and down, buying or renting Saigon apartments is continuously a concern of many young families wanting to start a new life in the city. Between renting and buying: What is the best solution for your demand, not to mention the financial capacity and young families’ long-term goals?

The problem of renting or paying a mortgage on Saigon apartments is all about balance out your savings and monthly income.

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According to 2017 survey data, the average GDP of Vietnamese people is about 1,911 USD – being among the lowest in the region. This directly affects young people’s capacity to own houses. In particular, there are currently 81% of citizen in Ho Chi Minh City earn less than 15 million/month. This income is relatively sufficient for basic daily expenses. If young families have to raise children, they even need a clear saving plan.

As stated by the CBRE survey, an average family puts aside an amount of 800 million VND after 7 years of accumulation, while the amount is only equivalent to half of an average apartment price today. Most families have to go for bank loan as the primary source of budget for a certain amount of time.

Not to mention, most of the Saigon apartments nowadays demand over 56% of payment in advance to proceed. Besides, if you rely heavily on the loan, the possibility of you ending up not being able to buy an apartment and carrying a substantial amount of debt is completely possible.

For those who do not have enough savings to buy an apartment, they can rent one to fulfill their living needs without incurring an enormous debt. Currently, there are various apartment segments for rent suitable for each financial ability.

Aside from buying apartments, your family also faces constantly raising taxes, management fees (which tend to increase over time), repair costs and so on. However, if you go for renting, taxes and other fees will be paid by the apartment owner.

Another problem is the procedure of transferring the apartment which usually reduces 10-20% of the value. Profits from the sale of Saigon apartments based mainly on location which determines the sharp increase or decrease in prices, followed by services and utilities. However, the increase in location-based prices is generally not significant for secondary apartments, but rather inland properties.

Taking the current situation into account, at the beginning of 2019, the trend of renting an apartment still occupies a higher proportion than the number of houses purchased. Meanwhile, you can spend your savings on other investment streams. And if you are successful, your return of investment can even cover the apartment rent itself.

In short, before you make the decision to rent or pay a mortgage on Saigon apartments, you need to consider the following 4 factors:

• Market buying and selling prices in the target area.
• Banks’ interest rates.
• Legal factors.
• Your financial capacity and needs.