A sustainable real estate market often has a diverse segment, especially low-cost housing products. However, in both Hanoi and Ho Chi Minh City, the supply of this type of housing is seriously lacking. The demand of about 50,000 apartments per year, mainly from middle-income people and young households, has not been fully met.
According to Ms. Giang Huynh - Director of Research and S22M at Savills, both Ho Chi Minh City and neighboring provinces such as Binh Duong, Dong Nai, Long An are facing a shortage of housing supply. In the near future, Ho Chi Minh City will witness an increase in high-end projects, while the supply of affordable housing is limited. This imbalance is due to many factors, including income growth, limited land fund and high land costs, along with complicated administrative procedures in licensing new development projects.
The increasingly scarce real estate supply is pushing housing prices sky high. According to statistics from Savills Vietnam, in the period 2019-2023, real estate prices in Hanoi increased by an average of 6%/year and in Ho Chi Minh City by 3%/year, while personal income increased by only 4% and 3% respectively. This widening gap makes home ownership more difficult than ever for many people.
There is currently no effective policy that offers hope of cooling housing prices. Without a supply of affordable housing, the real estate market’s problems cannot be solved. In addition, legal barriers, problems with developers, and delays in issuing housing support policies have made the situation more complicated.
Recently, there have been some opinions suggesting that it is necessary to tighten credit policies for speculators to prevent real estate price bubbles. However, in the context of the current scarce supply, experts recommend that it is necessary to be cautious in applying measures to increase taxes, increase interest rates or tighten credit for real estate.
Dr. Nguyen Duy Phuong - Investment Director of DG Capital - said that currently, the affordable housing segment has almost "evaporated" from the market. The projects being implemented in the market are mostly mid-range and high-end. It is not uncommon for the selling price to be pushed higher than the real value because it has to compensate for the expensive "invisible" costs due to many reasons. Once the housing supply is scarce, buyers are willing to accept high taxes and interest rates, because buying will bring profit. Once demand is higher than supply, real estate prices will increase even more.
The most fundamental solution at this time is to increase supply for the real estate market. Ms. Giang Huynh - Director of Research and S22M at Savills - said that to solve the problem of adequate housing and people's ability to pay, a comprehensive solution is needed, combining the strengths of both the public and private sectors. No single party can solve this difficult problem. In the context of limited state budget and high interest rates, funding for social housing projects is facing many difficulties. At the same time, the private sector is also facing inflationary pressure on input costs. Therefore, effective cooperation between the two sides is urgent.
“Additionally, affordable housing providers can help achieve these goals by renovating existing properties or converting unsuitable properties, such as vacant offices or shopping malls, with the support of favorable regulations and planning,” Ms. Giang Huynh said.
