A shortage of affordable property, poorly-placed social housing and rising high prices are lingering as the three largest problems Vietnam’s property market is set to face throughout this year.
No affordable property
For every 100 apartments sold in Hanoi last year, only three cost less than VND2 billion ($81,566), according to data from property consultancy Savills Vietnam. Most projects launched last year were in the middle or high-end price segments. High-end units accounted for 75% of new apartment supply in Hanoi last year, while the figure was 84% in Ho Chi Minh City. A recent survey of 1,000 VNExpress readers showed that half of them had put off buying a home this year because prices were too high. There is large demand for apartments for VND2 billion or lower, as 41% of respondents said they had enough money to such apartments.
Social housing conundrum
Amid a shortage of affordable homes, many people have turned to social housing in hopes of fulfilling their dreams of becoming homeowners in Vietnam’s largest cities. Last year, 1,300 people had to draw lots for the rights to buy 149 social housing units at a project in Hanoi’s Nam Tu Liem District, where prices start at VND19.5 million per square meter, an unusually low rate in the capital.
Inflated prices
Homebuyers have been hoping for a drop in property prices, something the happened in 2008-2009, but which not happened in recent years. Hanoi’s average apartment price rose 27% to VND56 million per square meter in the last quarter, while HCMC’s average apartment price went up 9% from the third quarter last year to $142 million. Nguyen Quoc Anh, deputy director of property listing platform batdongsan.com, said that prices will likely remain high this year due to the lack of new supply. The costs of land and construction material remain high while loan interests have yet to drop substantially enough, and developers are still focusing on new high-end segment projects for high profits, he added.