Social housing prices increase sharply

In 2017, Ms. Tran Le Thuy (from Bac Giang) borrowed money to buy a social housing unit of nearly 60 square meters in Long Bien for 16.5 million VND/square meter. Now that the apartment is eligible for transfer, Ms. Thuy wants to sell it to buy a larger apartment. When she researched the selling prices of apartments here, Ms. Thuy was surprised because the price had doubled compared to when she bought it.

Specifically, beautiful apartments with nice views cost 32 - 35 million VND/m2, apartments with worse views cost 29 - 32 million VND/m2.

"I don't think social housing prices can double in just 6-7 years," said Ms. Thuy.

In contrast to Ms. Thuy, Mr. Do Van Nam and his wife (from Hanoi) after many years of working in Hanoi have saved more than 1 billion VND to buy a house.

However, when looking at the prices of social housing, Mr. Nam and his wife were worried because the projects were increasing in price rapidly. Projects priced under 20 million VND were almost non-existent on the market. The cheapest apartment was priced at 1.8 billion VND.

"If we buy now, my wife and I will still be short nearly 700 million VND. None of our relatives have enough money to lend us, and if we borrow from the bank, we will have to pay interest," said Mr. Nam.

Many social housing brokers informed that most social housing projects have increased by about 120 - 130% compared to the opening price and are currently commonly traded at around 33 - 36 million VND/m2.

There are even projects where housing prices have doubled in a short period of time. For example, apartments at NHS Trung Van social housing are priced at around 35 - 40 million VND/m2, up 50% compared to when they were launched. A two-bedroom apartment with an area of ​​70m2, if 6 months ago, the price was around 1.4 - 1.5 billion VND, now such an apartment is priced at over 2.2 billion VND.

The social housing project in Rice City Linh Dam (Hoang Mai, Hanoi) was priced at 15 million VND/m2 at the time of opening. However, the current transfer price of this project is around 33 - 40 million VND/m2, nearly 3 times higher than the starting price, equal to the price of the mid-range apartment segment.

Similarly, at the Dong Mo Dai Kim social housing project (Dai Kim Building) located in Dai Kim ward, Hoang Mai district, it has been handed over to residents for nearly 6 years now, the initial price of the project was nearly 15 million VND/m2. Up to now, the selling price at this project has reached 30 - 42 million VND/m2.

A survey by Batdongsan.com.vn in early 2024 also recorded a series of social housing projects in Hanoi that have established new price levels compared to the previous two months. For example, in November 2023, the selling price of a 2-bedroom apartment at Rice City in Long Bien was 2.1-2.2 billion VND/unit, but from the end of December until now, the selling price has been 2.3-2.4 billion VND/unit.

It is worth mentioning that the number of apartments offered for sale on the transfer market is very small, buyers have almost no choice in terms of price if looking to buy an apartment in this project. The Hope Residence social housing project (Long Bien) also increased from 1.9 - 2 billion VND/2-bedroom apartment in November 2023 to 2.1 - 2.3 billion VND/apartment. Also in less than 2 months at the end of the year, the Thach Ban social housing project (Long Bien) increased from 1.8 - 1.9 billion VND/2-bedroom apartment to 2.1 - 2.2 billion VND/apartment.

In Hoang Mai district, the @Homes social housing project recorded an average increase of VND 150 million/unit in the last two months of the year. During the same time period, the Rice City Linh Dam social housing project increased from VND 2.1 - 2.3 billion/2-bedroom apartment to VND 2.3 - 2.5 billion/unit. Dong Mo Dai Kim social housing increased to VND 2.2 - 2.3 billion/2-bedroom apartment compared to the common price of VND 1.9 - 2 billion in October 2023.

Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Realtors (VARS), said that the supply of affordable housing has continuously decreased sharply. The proportion of apartment supply in the affordable segment (under VND25 million/m2) in the total housing supply has decreased from 30% in 2019 to 7% in 2022 and 6% in 2023. The main products of the market are mid-range and high-end housing.

Meanwhile, the real demand for housing is concentrated in the affordable segment and always leads the housing demand structure with a proportion of 80%.

Faced with the reality that affordable housing is gradually disappearing and apartment prices are constantly increasing, the Chairman of VARS believes that to solve the housing problem for low-income people, in addition to promoting the development of social housing, it is necessary to promote the development of affordable housing.

Commenting on the development of social housing, Mr. Dinh also said that the development of social housing will have more positive results in the future with "support" from policies.

The passage of the new Housing Law (amended) with many regulations to "remove difficulties" for buyers and investors developing social housing projects is expected to create attractiveness, attract more businesses to participate in developing this segment, as well as increase accessibility to this type for low-income people.

According to Mr. Giang Anh Tuan, Director of Tuan Anh Real Estate, social housing is the type of apartment in the lowest segment of the market today. When land prices fluctuate strongly, the price of commercial apartments in the primary market is pushed up too high, making the social housing apartment segment become a low-lying area, making it difficult to avoid the phenomenon of establishing a new price level in the secondary market.

Therefore, it is normal for assets to have their purchase and resale prices increase over time due to depreciation, and social housing apartments are no exception.

Mr. Tuan also analyzed that land prices have doubled compared to 5 years ago, construction prices have increased by 50%, so the cost is about 17 - 18 million VND to build according to the 12-month plan, the lowest price is up to 25 million VND/m2.

Although social housing is given priority in terms of land use fee exemption, 50% reduction in value added tax for buyers and investors are limited to a profit margin of no more than 10%, the input for developing this low-cost housing segment is unlikely to maintain the same price level as in previous years.