Illustrative image (Source: VNA)HCM City (VNS/VNA) – Fouryears ago, the State Bank of Vietnam (SBV)’s preferential loan creditpackage of 30 trillion VND (1.29 billion USD) helped thousands oflow-income people purchase low-cost apartments in big cities.
However, since the credit package stoppeddisbursing funds in mid-2016 many people have given up their dream of homeownership because of surging prices.
Hoang Thi Thuy Van, 48, in Ho ChiMinh City’s Thu Duc district, was able to buy a low-priced apartment four yearsago thanks to the preferential credit package, but many people still cannotafford to buy a home.
“I feel much more fortunate than many of mycolleagues who have not been able to buy an apartment,” she told VietnamNews.
Current housing prices are too high for them, nomatter how much money they save, she said.
“I once thought of moving closer to the citycentre in Binh Thanh or Phu Nhuan districts, but have decided to give up as theprice is far beyond what I can afford,” she said.
The real estate market has experienced severalso-called fever periods in recent years, pushing up property prices to a levelthat is unaffordable for people with low or modest incomes.
For example, a 70-sq.m one-bedroom apartment inan upscale project in Binh Thanh district which borders district 1, could costup to 4.5 billion VND (nearly 200,000 USD), a broker in the district who hasbeen in the industry for 10 years told Vietnam News.
A small house in a side alley without access fora car in district 4 or Phu Nhuan district could cost up to 5 billion VND (215,000USD), he said.
For houses on large streets in central districtslike districts 1, 3 and other nearby districts like Binh Thanh, Phu Nhuan and district4, the prices were too expensive for most people, the broker said.
The real estate market is suffering a severeshortage of affordable homes despite huge demand, experts have said.
The property products in the country do notmatch market demand, especially in major cities like Hanoi and HCMCity. The supply of high-end apartments is plentiful while there is a shortageof affordable housing.
Since mid-2017, the Grade C apartment segment(affordable apartments priced under 1,000 USD per sq metre) has seen a sharpdecline in supply, according to research conducted by DKRA Vietnam, ajoint-stock property company.
Grade A apartments (high-end segment priced from1,800-3,000 USD) and Grade B apartments (mid-range segment priced from 1,100-1,800USD) are far more plentiful than Grade C apartments.
Worse still, there are times when the affordablesegment has no new supply, according to DKRA’s research.
Under the 30 trillion VND loan packageadministered previously by the government, homeowners could buy an affordableapartment with an area of 70 square metres or below at 15 million VND persquare metre.
Le Hoang Chau, Chairman of HCM City Real EstateAssociation (HoREA), said the imbalance between supply and demand in theaffordable segment was a sign of unsustainable development in the market.
The affordable apartment segment accounted forthe smallest proportion of available housing, followed by the mid-end andhigh-end segments, which should instead account for the smallest percentage, hesaid.
“It’s very likely that affordable housing willnot even exist in the near future unless the Government takes action,” henoted.
In a recent meeting between real estatebusinesses and HCM City leaders, Nguyen Van Duc, Deputy Director of Dat LanhReal Estate Company, said the supply of low-cost housing had graduallyplummeted in the city in recent years.
More than 10 years ago, some real estateenterprises in the city such as Khang Gia, Nam Long, Dat Lanh and Le Thanhinvested in low-priced houses.
“However, not many of them are implementing suchprojects now,” he said.
Dat Lanh Company, for example, faced a shortageof capital to implement new low-cost projects.
The lack of investment was due to low profitsfrom such housing, Duc said, adding that if material prices or bank interestrates increase, the company could face losses.
“Investing in low-cost housing has low profits,only about 1-2 million VND per square metre,” he said.
Le Huu Nghia, Director of Le Thanh Real EstateCompany, said that real estate businesses were more interested in high-endhousing because of far higher profits.
The problem had been made worse by challenges inaccessing credit, complicated administrative procedures and a lack of landavailable for construction, he said.
Experts said that Vietnam should develop newpreferential policies in land, tax, interest rates, credit and mortgagesfor affordable home developers, and allow the development of apartments ofdifferent sizes.
Developing affordable homes is an urgent issueas rapid urbanisation is putting pressure on city infrastructure, such as powergrids, water networks and schools, they said.
Chau, Chairman of HoREA, said: “The demand foraffordable housing is huge in HCM City, and regulations on low-cost housingshould be issued.”
According to statistics from the CentralInstitute for Economic Management, on average more than 1 million peoplemigrate from rural areas to large cities like Hanoi and HCM City each year. Thefigure is expected to continue to rise.
It is estimated that demand for affordable homesaccounts for around 60-70 percent of total market demand, but the supply isless that 20 percent.
Apartments of less than 60 square metres withprices of less than 700 million VND (30,090 USD) account for only five percentof market supply.
According to statistics from the Ministry of Construction,by next year around 1.7 million people will be in need of homes in urban areastogether with 1.7 million workers demanding stable accommodations, requiringthe development of nearly 1 million apartments.-VNS/VNA
VNA
