Affordable apartments have become "extinct" in Hanoi and Ho Chi Minh City.

(NLDO)- In 2023 and early 2024, there will be almost no new projects in the affordable housing segment implemented in Hanoi and Ho Chi Minh City.

According to research data from the Vietnam Association of Realtors (VARS), the affordable apartment segment (priced under VND25 million/ ^m2) - affordable housing, has become "extinct" in the past few years and is very difficult, even impossible, to reappear in Hanoi and Ho Chi Minh City.

VARS believes that affordable housing in the central areas of Hanoi and Ho Chi Minh City is unlikely to "appear" because the number of housing projects approved for investment in recent years can be "counted on the fingers".

In 2023 and early 2024, there will be almost no new projects in the affordable housing segment being implemented, with ongoing real estate projects mainly focusing on the high-end segment.

Explaining why affordable housing does not receive much attention, VARS said the first reason is that the profit margin from this segment is lower than that of high-end segments, so it does not receive much attention from businesses.

Affordable housing is gradually disappearing from the market. Illustration photo

To build affordable housing, developers must optimize costs from land fund, construction to operation. Meanwhile, calculations by project developers show that with a profit margin of only about 15%, just holding capital for 1-2 years or selling slowly for 1-2 years will result in a loss.

Moreover, central land is increasingly scarce, currently and in the future it is mainly located in large urban areas with a series of infrastructure and public utilities that need investment, plus input costs, especially land costs, are increasing, prices cannot be affordable.

In particular, legal procedures related to land and planning are major barriers.

In addition, credit support policies for home buyers in this segment have not been implemented synchronously. Financial support packages for low- and middle-income earners, such as preferential interest rates and loan sources, still face many difficulties in accessing and complicated procedures.

Third, high-end projects bring high profit margins and are not difficult to sell. Because the demand for high-end housing from high-income customers is constantly increasing along with economic development and foreigners from the wave of foreign investment as well as overseas Vietnamese on the basis of the new legal corridor "relaxing" ownership conditions for this group.

In fact, the number of customers willing to pay a premium to own the most limited and high-end products in the project has made the affordable housing segment even less attractive to project developers.

To address the shortage of affordable housing supply, VARS believes that there needs to be strong intervention from the State, such as developing policies to create favorable conditions for investors to develop affordable commercial apartments, such as applying policies to exempt land tax, corporate tax, or increase construction density or land use coefficient compared to standards for affordable commercial housing projects.

At the same time, priority is given to planning approval and construction licensing, helping to shorten project development time, thereby reducing investment costs...

Source: https://nld.com.vn/vars-chung-cu-binh-dan-da-tuyet-chung-o-ha-noi-va-tp-hcm-19624112515461649.htm