Improving affordable housing supply is a difficult problem

Bảo Chương |

Falling real estate prices and increasing affordable housing projects are a difficult problem for investors in the current context.

Not only in Ho Chi Minh City, the sharp decline in affordable housing for workers is also happening in other major cities across the country. Housing prices continue to increase over the years, causing the low-cost housing market to disappear.

According to the 2024 real estate market overview report recently released by real estate consultancy Avison Young, apartments priced under VND40 million per square meter have disappeared in Ho Chi Minh City. According to Avison Young, the average selling price of primary apartments in Ho Chi Minh City is approaching the high-end segment, averaging VND72 million per square meter. Old projects that have just been restarted also announced new prices that are about 30% higher than before. There are no new projects on the market with prices under VND40 million per square meter.

Ms. Giang Huynh, Director of Research and S22M Savills Vietnam, stated that there are many main reasons for the lack of supply in the market. First, legal procedures related to project approval are facing many difficulties. The long project implementation time has limited the ability to bring new products to the market. This directly affects the primary housing supply in Ho Chi Minh City, at the lowest level in the past 5 years.

Next, land and construction costs are rising as developers face difficulties in accessing clean land. Even when land is available, rising acquisition and construction costs complicate the financial equation.

Ms. Giang Huynh acknowledged that in the 2025-2027 period, supply is expected to gradually recover, but the scale will still be modest compared to the 2018-2019 period. Specifically, the high-end housing segment (class A, B) will account for more than 50% of future supply, while the affordable housing segment (class C) continues to be scarce in the inner city. This means that housing prices are unlikely to fall sharply, especially in central areas and new urban areas well connected to the center.

Talking to reporters, many real estate investors said that it is not that they do not want to build affordable housing because this is a segment with high liquidity. But in the current context, the profit margin when doing this segment is quite low, only about 15%. If capital is stagnant or slow to sell for 1-2 years, investors will suffer losses. Meanwhile, high-end projects still have good liquidity because of high investment demand, making investors less interested in mid-range and affordable housing.

In addition, the central land fund is increasingly scarce, input costs, especially land costs, are increasing. Forecasting housing price developments in 2025, many experts believe that prices will likely continue to increase following the impact of the adjusted Land Price List, with an expected increase of 15-20% according to the previous judgment of the Ministry of Construction.

Ms. Duong Thuy Dung, CEO of CBRE Vietnam, analyzed that in the current context, reducing housing prices and increasing affordable projects is a difficult problem, posing many big challenges for businesses and management agencies. Currently, the market does not have any factors or conditions for housing prices to decrease in the short term, while there are many factors that cause prices to increase such as new land price list, land costs, labor, construction, transportation, etc.

"Ninety percent of the supply in the market in 2025 will still be in the high-end and luxury segment. If this trend continues, prices will continue to rise, with an average increase of 8-10% per year," she predicted.

According to Ms. Dung, one of the factors that can reduce prices is population dispersion, but this can only be done when investment in infrastructure and public investment is further promoted. Although there have been positive signals about infrastructure and public investment, in the next 3 years, this impact will not be strong enough to change the situation.

Bảo Chương
TIN LIÊN QUAN

HCMC has a headache solving the problem of affordable housing

|

Commercial housing investors all want to sell at low prices to boost product consumption, but this is not possible at this stage.

Affordable housing is getting harder to make

|

HCMC - In the context of increasing input costs for project development, building affordable housing is increasingly difficult.

Workers propose to build social housing, low-cost housing

|

Lam Dong - Union members and workers propose building social housing and low-cost housing for installment sale, so that they can soon stabilize their lives.

Prioritize land development for low-cost housing projects

|

HCMC - The affordable housing segment is becoming less and less attractive to project developers.

Organizing separate test scores for independent candidates in high school graduation exams

|

HCMC - Candidates studying under the old and new programs will take the exam at different exam scores in this year's high school graduation exam.

The White House states why Russia is not subject to counterpart tariffs

|

President Donald Trump announced the imposition of countervailing tariffs on February 2 on 185 countries and territories, but Russia is not on the list.

Hanoi promotes tourism with a unique gift festival

|

Hanoi To stimulate tourism, from April 11 to 13, Hanoi will organize the 2025 Tourism gift Festival.

New developments in the case of a valedictorian becoming a high school slide in Thanh Hoa

|

C.T.H - a student of class 10A4 at Le Hong Phong High School (Bim Son, Thanh Hoa) has dropped out of school after a scandal from the valedictorian.

HCMC has a headache solving the problem of affordable housing

Bảo Chương |

Commercial housing investors all want to sell at low prices to boost product consumption, but this is not possible at this stage.

Affordable housing is getting harder to make

Bảo Chương |

HCMC - In the context of increasing input costs for project development, building affordable housing is increasingly difficult.

Workers propose to build social housing, low-cost housing

BẢO LÂM |

Lam Dong - Union members and workers propose building social housing and low-cost housing for installment sale, so that they can soon stabilize their lives.

Prioritize land development for low-cost housing projects

Bảo Chương |

HCMC - The affordable housing segment is becoming less and less attractive to project developers.