Social housing prices are as expensive as commercial housing, the poor are shocked

Ms. Nguyen Thi Phuong (from Hung Yen) shared that nearly 10 years ago, she bought a 60m2 social housing apartment in Ha Dong district for only about 10 million VND/m2. Now, when asking a broker to sell this apartment to buy a larger one, Ms. Phuong was very surprised because the price had increased 3-4 times compared to when she bought it, fluctuating between 35-37 million VND/m2.

Similarly, the price of social housing at the Rice City Linh Dam project (Hoang Mai district) has also increased more than three times. Specifically, when this project was launched, the price was only nearly 15 million VND, but now it has increased to 55 - 57 million VND/m2.

Many other social housing projects, although in use for decades, are still being offered for sale at prices 2-3 times higher than the initial selling price of the investor when the project was implemented. For example, the Ecohome social housing project (Bac Tu Liem district) was handed over in 2020, with the selling price from the investor being around 16.5 million VND/m2. However, many units are now being offered for sale at prices ranging from 40-43 million VND/m2, nearly 3 times higher than before.

Social housing in Dang Xa urban area (Gia Lam district) was opened for sale around 2014 - 2015 with a price of about 13 million VND/m2. But now, after about 10 years, the price has increased to 40 million VND/m2, an increase of more than 3 times.

The Rice City Song Hong project (Long Bien district) was opened for sale in 2018 at a price of 13 million VND/m2, but now the secondary selling price has been pushed up to 39 - 42 million VND/m2.

Similarly, the social housing project in Dai Kim (Hoang Mai district) was opened for sale in 2016 at a price of 14 million VND/m2. But now the price has nearly tripled, to 32 - 35 million VND/m2.

Mr. Tran Anh Tu, a broker in Hanoi, said that most social housing projects have increased by about 200 - 400% compared to the opening price and are currently trading at around 35 - nearly 60 million VND/m2 depending on the area and quality of the apartment. With this price, low-income people can hardly afford to buy. For example, if the income of a couple is about 20 million VND/month, spending 10 million VND, saving 10 million VND/month, each year will save 120 million VND. To have 3.7 billion VND to buy a social housing apartment of about 75m2, it will take about 33 years of saving, provided there are not too many additional expenses.

A recent market report by Savills also said that Hanoi had no new supply of apartments priced below VND45 million/m2 in the second quarter. Since 2020, the affordable apartment segment (class C) has decreased by 45% per year. In the future, this segment is expected to contribute only 25% of new supply.

Similarly, a report by the OneHousing Market Research Center also showed that Hanoi has not had any affordable apartments (under VND30 million per square meter) for sale for 8 consecutive quarters. The high-end apartment segment (VND50-80 million per square meter) accounts for 61% of new supply.

Explaining the high price of social housing, Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Realtors (VARS), said that the first reason is the imbalance between supply and demand: Excess of luxury housing, shortage of affordable housing that has lasted for decades. Meanwhile, the demand for affordable housing is high but the supply is very low, leading to a shortage of goods. 60% of the supply for sale in the second quarter belongs to the high-end segment over 50 million VND/m2 and luxury, concentrated in a large urban area in Hanoi. The affordable segment only accounts for 7%.

The next reason is that apartment prices have also established a new level. New apartments under VND50 million/m2 have become scarce. In the first half of this year, the basket of apartments in new projects was in the price range of VND60-80 million/m2. Meanwhile, the demand for housing is still very large. The total housing demand in the capital by 2025 is 185,200 houses, of which nearly 90% are apartments. Mr. Dinh said that from now until 2025, on average, Hanoi will lack about 50,000 apartments each year.

"High demand, while weak supply, pushes up housing prices and social housing prices are not outside the market vortex, continuously increasing in price, regardless of many factors," said Mr. Dinh.

Besides, according to Mr. Dinh, with the new legal regulations, land prices in our country may be pushed higher. The sharp increase in land prices will impact the price of apartments, whether old or new. Currently, land prices have increased a lot compared to 5 years ago; construction prices have also increased sharply, so apartment prices must certainly be higher than before.

Sharing the same view, Mr. Nguyen Quoc Anh - Deputy General Director of PropertyGuru Vietnam said that there are two main reasons for the sharp increase in prices of apartments in Hanoi in general and social housing in particular.

That is the limited supply of apartments in Hanoi. Although there have been measures to remove legal obstacles for investors, recent new projects only contribute about 20,000 - 30,000 apartments per year, while the normal demand is up to 70,000 - 80,000 apartments/year.

Another reason is that the demand for apartments in Hanoi is still high. Notably, this demand comes not only from Hanoi and the northern provinces but also from the South.

To cool down social housing prices, Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), proposed that social housing projects should be allowed to adjust the land use coefficient or construction density up to a maximum of 1.5 times, in order to effectively utilize land area and create more apartments.

This not only helps increase land use efficiency but also creates more favorable conditions for investors in developing social housing projects. At the same time, compensation and site clearance costs will be allocated less to each apartment, thereby reducing the cost of social housing.