A studio in Ho Chi Minh city center : roughly 500 USD/month Average salary in Vietnam : 300 USD/month I have noticed the same thing in other "poor" countries : a studio rent is so expensive compared to the average salary. Is there an explanation ? And how do vietnamese people pay their rent ??
The rent figure in the question relates to the centre of Ho Chi Minh City and it is a fallacy to infer that it is typical of the whole of Vietnam. There is a body of theory going back to von Thunen suggesting that land rents will generally fall with distance from a city centre, forming a rent gradient. Given a free market in land and property, residents and entrepreneurs will choose where to live or site their businesses with regard both to price and to costs of travel and transport, and this tends to result in such a gradient in land rents. Property rents will depend on the size and type of property as well as land rents per unit of area, but otherwise similar properties will tend to be cheaper with greater distance from a city centre.
In the case of Ho Chi Minh City, this World Bank Report indicates (p 153 Section 3.4.1. Prices) that the market for land is subject to considerable government intervention, but that land prices are nevertheless much lower in peripheral districts than in the city centre.
While the factors listed by emeryville may also play a part, a large part of the answer to the question "How do Vietnamese people pay their rent?" is probably therefore that most poorer people do not live in the parts of large cities where the rents are highest.
One reason could be price discrimination. For instance, the same apartment is not rented the same price for locals vs (rich) foreigners.
Other potential reasons:
- the apartment could also be furnished or designed specifically for rich people (product differentiation);
- the given price could be a base price subject to harsh negotiation;
- locals may have access to better information on the rental market and may find better opportunities.