Why is the price of used social housing increasing day by day?

Low-income housing but no longer low-priced

Recently, as the supply of affordable apartments has not shown any signs of improvement, especially in areas not too far from the city center, many people have sought to buy old social housing apartments.

Although they are social housing units and have been used for many years, these apartments are currently being sold at prices beyond the affordability of low-income groups. For example, the Felix Homes project in Go Vap (HCMC), which was advertised for sale at VND14 million/m2 in 2017, was a social housing project that was well received by many people. At that time, people with incomes lower than VND9 million/month were also lent 70% of the apartment value by the bank with preferential interest rates, with payments deferred for 15-20 years. With about VND240 million, buyers could own an apartment in this social housing project.

But through research, currently an apartment at Felix Homes with an area of ​​56m2 is being sold for 1.69 billion VND, equivalent to about 30 million VND/m2. In addition, there are sellers who are selling apartments in this project for prices from 35 to 45 million VND/m2.

Felix Homes Social Housing Project in Go Vap.

In Hanoi, the NOXH @Home project in Yen So (Hoang Mai, Hanoi) was advertised at 1.2 billion VND/apartment of 55m2, with handover at the end of 2018 and a 20-year loan with preferential interest rates. Thus, each m2 of this project costs about 20 million VND, a price that is not very suitable compared to a NOXH project but is also cheaper than some commercial apartment projects at that time.

But at the present time, the price of a 55m2 apartment at the @Home project is being offered for sale at 1.75 billion VND, equivalent to 31 million VND/m2. In addition, some larger apartments in this project are also being offered for sale at prices up to 36 million VND/m2.

With the increase in prices of many old social housing projects, the ability to own a house for real housing needs has become more difficult than ever for many people. Sharing about her journey of finding a house, Ms. Dao Thu Trang (35 years old, Ho Chi Minh City) said that she and her husband have been looking for and viewing houses for nearly 2 months now but have not found a house that is satisfactory in terms of both price and location.

“The old social housing units, even though they have been occupied for a long time and show signs of deterioration, still do not decrease in price. I have looked at many projects but none of them are sold for less than 30 million VND, beyond my family’s financial capacity. The social housing projects with suitable prices are too far away or require moving to neighboring provinces, if I buy there, it will be very difficult for my work…”, Ms. Trang shared.

Apartments at Felix Homes are being resold by many people at double the primary price.

Ms. Trang said that the idea of ​​buying old social housing came from a friend. After a period of searching, her family found an old apartment for 28 million VND/m2. However, if you calculate the cost of renovating the apartment, the price is around 30 million VND/m2. This is a price beyond the ability of low-income groups, so it is not a good option for many people. Therefore, the idea of ​​buying old social housing because they think the price will be cheaper because the apartments are showing signs of deterioration is not true to reality.

According to research, the price of social housing has continuously increased in the secondary market and reached a new peak in the primary market. For example, the recent NHS Trung Van project (Hanoi) has seen the investor's price fluctuate from 19-20 million VND/m2. Not to mention the fees that may be incurred when currently, the number of people wishing to buy a house in the project and submitting their application is extremely large.

Why do old social housing prices increase?

Answering this question, many opinions say that the key factor that causes old social housing prices to continue to increase is the supply issue.

According to the latest report of the Ministry of Construction, in the first quarter of 2023, the whole country only had 1 social housing project with a scale of 300 newly licensed apartments; 5 projects with a scale of 1,908 apartments eligible to sell future housing; 4 projects with a scale of 934 apartments completed construction...

Of which, there are 397 worker housing projects under construction with a scale of 453,426 units, 152 projects under construction with a scale of 153,426 units; 245 projects with a scale of 300,000 units are undergoing investment procedures... With many projects still in the "under construction" status and the current supply of social housing being only a very small part of the demand, the prices of some old projects have increased sharply because the prices are still not too high compared to commercial apartment projects.

The development of social housing in the next few years will hopefully help many people own houses.

According to this report, in the past 5 years, used social housing apartments that are eligible for trading and selling on the real estate market have increased in price quite rapidly, commonly increasing to 17 - 19 million VND/m2 (compared to the average primary selling price of 12 - 15 million VND/m2). Currently, in some areas, social housing prices have reached 21 - 25 million VND/m2, even up to 30 - 35 million VND/m2, making it inaccessible to many low-income people in need.

According to the staff of the brokerage floors, the price of each apartment increases more or less depending on the location, direction of the apartment, the accompanying furniture and the development of the infrastructure around the project. Especially with some social housing projects that were once built in areas with poor infrastructure, but over the years these areas have developed strongly with a dense population, causing the price of apartments here to increase sharply and sometimes double the original price.

In addition, experts also said that social housing receives incentives from the State's policies on land use fees, taxes, etc. and is bound by regulations that can only be transferred after 5 years, so the primary price is much lower than that of commercial housing. Therefore, when the time comes for transfer, the price of old social housing begins to increase sharply.

Responding to this issue, Mr. Vo Hong Thang, Deputy Director of R&D DKRA Vietnam, pointed out 3 main reasons for the increase in price of old social housing.

First of all, it is about legal issues, with the long time for project licensing approval increasing other costs, including interest, operating costs, opportunity costs... All of the above items have inflated the selling price of the product.

The second is the problem of capital sources. This includes the sharp increase in bank interest rates and other capital mobilization channels becoming more expensive. Finally, it is due to the sharp increase in input costs. Land prices, labor costs, and raw materials (iron, steel, sand, cement, etc.) have all increased sharply in recent times.

Source: https://www.congluan.vn/vi-sao-nha-o-xa-hoi-da-qua-su-dung-ngay-mot-tang-gia-post248197.html