Owning an apartment in HCMC is a dream of many young people (Photo: SGGP)
After graduating from university, a man named Quang worked at a state company in HCMC. His average income is about VND 10 million a month, plus his wife's income is as same as his. The couple has nearly VND1 billion from their savings and parents’ support; therefore, they thought they can buy an apartment in the city.
Quang went to an old apartment building in the South Saigon area such as Hoang Thap, Hong Linh, Him Lam. An apartment with an area of 65 square meters is worth VND2 billion.
Three years ago, Quang decided not to buy while the price was VND1.6 billion because he was afraid of paying high interest, but now it has jumped to more than VND2 billion. Furthermore, a 100 -square -meter apartment in the New Saigon building cost VND1.8 billion at that time, it is now VND2.3 billion.
Worse, new housing projects cost over VND40 million per square meter; for instance, an apartment with two bedrooms is sold at VND3 billion.
In fact, he can afford an apartment of about 40 square meters in the east of Ho Chi Minh City. However, the apartment is located near Suoi Tien tourist area in District 9, he finds it inconvenient to go to work. So many people have registered to buy social housing projects while construction projects were too few, and he didn't know when it would be his turn.
Quang is one of many people with an average income in Vietnam’s major cities who are seeing their dream of homeownership slip away as prices increase every year and the supply of affordable housing has almost disappeared from the market. Affordable apartments are those that are priced under VND20 million per square meter, according to the Ministry of Construction.
According to the latest report of the Ministry of Construction, in the second quarter of 2021, Ho Chi Minh City has only two affordable apartment projects, namely The East Gate in Thu Duc City, which costs about VND27 million per square meter, and the Tecco Town project in Binh Tan District with VND24 million per square meter.
However, two other housing projects including the East Gate project and the Tecco Town project at 45 Tan Lap Street in the Southern Province of Binh Duong’s Di An City with areas from 32.5 to 69.7m2 are put up for sale at nearly VND30 million per square meter. The East Gate is currently under construction while the Department of Construction confirmed that the Tecco Town project was eligible to sell apartments. The project has officially handed over the house since mid-2018 and in 2019 the investor continues to hand over the entire apartment to customers. Currently, the project costs about VND 27 million per square meter.
Generally, in the second quarter, there were no more affordable housing projects in the southern largest city. The Ministry of Construction announced more apartments fluctuating from VND30 million up while the affordable segment barely exists in the market despite large demand. A sharp decline in supply has made it more challenging for low-income people to afford a house.
Ngo Quang Phuc, General Director of Phu Dong Company said six years ago the company’s first project comprising 2-bedroom apartments was sold at VND 1.2 billion, it is now VND2.4 billion while the apartment was VND1.5 billion in 2018, it's now VND2.3 billion.
Why do house prices increase? Because, input costs have increased sharply; land prices and construction materials prices have also leaped while project investors must wait longer for approval, resulting in increased interest expenses by 15 percent each year. This house price includes all the above-mentioned fees, therefore, it cannot be lower.
Being a real estate expert, Professor Dang Hung Vo said that speculation has made the market always hot. The State must enact a property tax to eliminate speculation. The more houses a person owns, the higher they pay for the land tax. Once people realized that investment in real estate is no longer profitable, the market will cool down and it is high time to develop affordable housing.
