Morning Edition, February 5, 2008 · Home prices may be slumping in the United States but in communist Vietnam, they are going through the roof.
In Hanoi, Bui Vu Thi has a new apartment in a good neighborhood with two bedrooms, one bath and a great view of the lake. She bought it three years ago, before it was even built. With some help from her parents, she paid $92,000 in cash. Today, she says, it's worth three times that.
In Ho Chi Minh City, formerly Saigon, the market is even hotter. Last month, developers put a 580-unit project on the market where the cheapest apartment cost $280,000. All of the units were sold in less than a day; more than 5,000 people showed up with deposits in-hand for a chance to buy.
Jonathan Pincus, a senior country economist for the United Nations Development Program in Vietnam, says that the real estate boom is largely speculation from people with excess cash.
"You could buy gold, I guess, but gold is at record high prices. For a while, people were putting money in the stock market, but that didn't do so well last year. So what choices do people have if they do have cash to invest?" Pincus says.
There's a lot of cash in Vietnam today, and more coming in foreign capital remittances from Vietnamese living and working overseas. The remittances are worth an estimated $5 billion a year; a lot of that money is flooding into the property market, pushing prices up.
The boom is good news for people like apartment owner Bui Vu Thi, but it's bad news for people like 48-year-old Nguyen Anh Tuan, a security guard at a state-run school in Hanoi. He says he's been looking for a modest two-bedroom apartment in a decent neighborhood for about a year now. He has $50,000 that he's saved or borrowed from family and friends, but it's not nearly enough.
Nguyen says he's not a speculator. He's just a guy who wants his own place — something to leave his children.
His agent, Quynh Nhu, says there are a lot of people like Nguyen who are getting squeezed out. Quynh says it's happening more and more to people who work for state agencies — and to other ordinary people.
Today, almost everyone dreams about buying their own place. But for many of them, she says, it's a dream that's getting harder to realize.