ANTD.VN - The recent increase in real estate supply is mainly contributed by the high-end segment, while affordable housing is being "abandoned", making the imbalance between supply and demand increasingly serious.
No more new supply of affordable apartments
According to the Vietnam Association of Realtors (VARS), the Vietnamese real estate market has gradually "heated up" thanks to the driving force of new supply and support policies from the Government. However, the increase in supply is mainly in the high-end segment while affordable housing is being "abandoned".
VARS research data shows that the affordable apartment segment (priced under VND25 million/m2) has become “extinct” in the past few years and is very difficult, if not impossible, to reappear in Hanoi and Ho Chi Minh City.
Specifically, in Hanoi, the proportion of newly launched affordable apartments reached 35% in 2018, decreased to 20% in 2019 and only 12% in 2020. In 2021 and 2022, the supply of apartments in this segment continued to decrease, reaching only about 4% of the total supply of apartments launched for sale and reaching 0% in 2023.
In Ho Chi Minh City, the decline was even stronger when in 2018, the proportion of newly launched affordable apartments accounted for 20% but dropped to only 0.5% in 2020 before completely disappearing in 2021.
Until the first 9 months of 2024, the supply of apartments witnessed a significant recovery, but about 80% of the supply of apartments opened for sale in Hanoi and Ho Chi Minh City had a selling price of VND 50 million/m2 or more.
Research on the apartment price index, reflecting the average selling price fluctuations of projects in the sample set of 150 projects selected and observed by VARS, also shows that, as of the third quarter of 2024, the average selling price of the sample project cluster in Hanoi is close to 60 million VND/m2, an increase of 64.0% compared to the second quarter of 2019.
The average selling price of project clusters in Ho Chi Minh City increased from VND49.2 million/m2 to VND64.2 million/m2, reflecting a 30.6% increase over the same period.
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Affordable apartment supply has disappeared in Hanoi and Ho Chi Minh City. |
Why are businesses not interested in the low-end segment?
According to VARS, the main reason why affordable housing has not received much attention from real estate developers is because the profit margin from this segment is lower than that of the high-end segment. Calculations by project developers show that 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.
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.
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 scarce land fund for housing development in big cities, make project developers consider carefully before investing in this segment.
In addition, credit support policies for home buyers in this segment have not been implemented synchronously.
Third, high-end projects bring high profit margins and are not difficult to sell. Because the demand for high-end housing, including both residential and investment needs, is very large, from the group of 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, there are many customers willing to pay a premium to own the most limited and high-end products in the project. This makes the affordable housing segment even less attractive to project developers.
Need State intervention
To address the shortage of affordable housing supply, VARS believes that strong intervention from the State is needed.
Accordingly, the State needs to research and develop policies to create favorable conditions for investors to develop affordable commercial apartments (exemption from land tax, corporate tax, or increase construction density or land use coefficient compared to standards for commercial housing projects).
At the same time, priority is given to planning approval and construction licensing, helping to shorten project development time...
Second, the State should promote cooperation projects between the Government and the private sector to build affordable housing (the State provides land incentives and legal support).
Third, there should be policies to support people’s demand for housing. The government can consider establishing a fund to support the development and maintenance of the supply of low-cost apartments…
In addition, the State needs to have policies to limit speculative motivation, and should soon study and apply real estate tax, targeting real estate owners who do not put their real estate into business activities, or do not carry out construction after receiving land...
It is necessary to establish housing supervision agencies or committees, and take strict sanctions against cases of speculation, price manipulation or illegal price increases.
However, for regulatory policies to be truly effective and ensure the market operates safely and healthily in the long term, the State needs to soon complete the information and data system on the real estate market and the system for managing identified housing.
Source: https://www.anninhthudo.vn/vars-can-ho-binh-dan-mat-dau-tai-ha-noi-va-tphcm-post596623.antd
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