In 2018, the proportion of affordable apartments in Hanoi accounted for 35% of new supply. However, in 2024, this number dropped to 0%. According to the Vietnam Association of Realtors, there are 3 main reasons leading to this situation.
In 2018, the proportion of affordable apartments in Hanoi accounted for 35% of new supply. However, in 2024, this number dropped to 0%. According to the Vietnam Association of Realtors, there are 3 main reasons leading to this situation.
According to the Vietnam Association of Realtors (VARS), since 2023, apartments priced below VND25 million/m2 have disappeared in Hanoi and are unlikely to reappear. On the other hand, the high-end segment is increasingly "dominating the airwaves". In the past 9 months, 80% of the supply of apartments for sale in Hanoi had a selling price of VND50 million/m2 or more.
However, before falling into a state of “extinction”, the proportion of newly launched affordable apartments reached 35% in 2018, then decreased to 20% in 2019 and only 12% in 2020. In 2021 and 2022, the supply of affordable apartments in Hanoi continued to decrease, accounting for only about 4% of the total supply of apartments launched for sale.
 |
| Apartments located in districts on the outskirts of Hanoi also cost no less than 30 million VND/m2. Photo: Thanh Vu |
In VARS's view, there are three main reasons for this situation.
Firstly , investors and real estate developers themselves are not interested in the affordable housing segment, due to lower profit margins compared to the high-end segment. To build affordable apartments, businesses must optimize many costs, from land funds, construction to operations.
“With a profit margin of only about 15%, if capital is stagnant for 1-2 years or sales are delayed for 1-2 years, developers will lose money,” the association's experts concluded.
In addition, among the input costs of enterprises, land costs are increasing, in the context of increasingly scarce land funds in central areas. This forces enterprises to increase apartment prices to compensate for capital.
Second , although the Government has been introducing many policies to encourage the development of social housing and affordable housing, legal procedures related to land and planning are still major barriers. The complicated licensing process, long time, along with the increasingly narrowing land fund for housing development in big cities, make project developers have to consider carefully before investing in this segment.
In addition, credit support policies for home buyers in the social housing 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 , apartment prices are unlikely to “cool down” in the near future, because high-end projects bring high profit margins but still have good liquidity. Some projects recorded absorption rates of up to 99% right at the time of official opening for sale.
This trend is reinforced by the fact that the high-income customer base is constantly increasing along with the development of the economy. In addition, money from foreigners and overseas Vietnamese is also flowing into the Vietnamese real estate market, thanks to the new legal corridor that loosens home ownership conditions.
However, even if this group of willing-to-spend customers tends to increase, the majority of Hanoians still only have enough income to live on. According to the most recent report of the General Statistics Office, the average income per capita in Hanoi in 2023 is only 6.869 million VND/month. If compared to current housing prices, the situation will be similar to the statement of National Assembly delegate Nguyen Cong Long (Dong Nai delegation) - "Civil servants do not have to work for hundreds of years to buy a house".
To address the imbalance between supply and demand, VARS recommends that the State should study and develop policies to create favorable conditions for investors to develop affordable commercial apartments, such as applying policies to exempt land tax and corporate tax, or increase construction density or land use coefficient compared to standards for affordable commercial housing projects.
“The State should promote cooperation projects between the Government and the private sector to build affordable housing. The private sector will undertake most of the construction and development process, while the State provides land incentives and legal support,” VARS said.
In addition to promoting supply, the Vietnam Real Estate Brokers Association also proposed that management agencies research and establish a fund to support the development and maintenance of low-cost apartment supply; issue policies to limit real estate speculation; build an information system and market data, etc.
Source: https://baodautu.vn/batdongsan/nguyen-nhan-khien-can-ho-binh-dan-tai-ha-noi-tuyet-chung-d230856.html
Comment (0)