Tuesday, April 7 2020


Market moving away from social housing

Update: February, 20/2016 - 09:43
A view of Dang Xa Housing Project for low-income earners in Gia Lam District, Ha Noi. Social housing projects seemingly were not of interest of developers amid a boom in the high-end segments. — VNA/VNS Photo Tuan Anh

HA NOI — The number of social housing projects in 2016 is expected to fall as there is a boom in the middle and high-end market segments, experts said.

In 2012, the development of social housing projects was seen everywhere from the north to the south. Several such projects, such as Rice City west-south Linh Dam, EcoHome and 31 Tran Phu, were implemented, while many property investors also applied to reduce the area of apartments for the benefit of low-income buyers.

The social housing project boom at that time was due to a stagnant estate market. Investors had to focus on the low-income housing segment as there was abundant supply of high-end projects.

However, in 2016, the property market is showing signs of warming up, and it seems social housing projects are disappearing.

Statistics from the construction ministry showed that HCM City would welcome 50,000 to 60,000 new apartments by 2017, with a majority being in the middle and high-end segments.

Vu Cuong Quyet, director of Dat Xanh Company in the north, said most of their transactions in Ha Noi in November involved high-end apartments, villas and terraced houses. The number of transactions for low-income apartments was on hold.

Vo Huu Khoa, deputy general director of CityLand Company, said the boom in the high-end segment was happening due to an estate market that was warming up. Investors will focus on the high-end segment because of higher profits. In addition, speculators are also paying attention to the segment.

Khoa said the trend would continue in 2016.

The World Bank also released a survey at the end of 2015, showing that more than 40 per cent of the Vietnamese households had an average income of less than VND10 million a month, which made it hard to buy an apartment.

Huynh The Du, director of Fulbright Economics Teaching Programmes, said if the average housing price was VND9.7 million (USVND9,654,552) per sq.m, people with incomes of VND5 million (VND4,983,716) to VND7.7 million (VND7,665,536) a month would have no opportunity to buy an apartment. Those with incomes of VND10.2 million (VND10,146,219) to VND14.3 million (VND14,191,298) a month can buy a 39sq.m to 55sq.m apartment.

However, in reality, a report of Savills Viet Nam showed that the average housing price in Ha Noi and HCM City was VND25.6 million (VND25,410,245) per sq.m in the last quarter of 2015.

Tran Ngoc Hung, chairman of the Viet Nam Federation of Civil Engineering, said Viet Nam should have a new mechanism for social housing investment. Accordingly, the investment should follow the market mechanism, while a low-income earner would enjoy low interest rates of 0.5 to one per cent for their loans, when buying an apartment.

Statistics from the ministry and the Viet Nam General Confederation of Labour showed that the demand for low-income apartments in urban areas would be one million a year by 2020, while the country could supply only 10,000 apartments. In industrial zones, only 20 per cent of the labourers have stable accommodation. — VNS

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