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Ho Chi Minh City running out of affordable apartments

Ho Chi Minh City running out of affordable apartments

Monday, March 14, 2022, 11:32 GMT+7
Ho Chi Minh City running out of affordable apartments
A residential area with affordable units in Binh Tan District, Ho Chi Minh City. Photo: Tu Trung / Tuoi Tre

No apartments were sold at less than VND25 million (US$1,092) per square meter (sqm) in Ho Chi Minh City in 2021, whereas most units were priced at more than VND40 million ($1,748) per sqm. 

The Ho Chi Minh City Real Estate Association (HoREA) released a report to highlight a paradox in the property market where budget houses stayed out of the reach of low-income earners in 2021.

The city has seen a supply-demand imbalance in the real estate market, with a huge stock of luxury apartments or condominiums and a shortage of affordable or mid-priced housing. 

HoREA cites data from 2016-21 showing the rate of affordable housing went down over that period, standing at just one percent in 2020 and zero in 2021.

During the same phase, luxury housing dominated the local market.

There were 58,241 luxury apartments, priced above VND40 million per sqm, accounting for 37.2 percent of the total number of units in Ho Chi Minh City, according to HoREA.

The middle segment, with a price range of VND25 million ($1,092) to VND40 million per sqm, boasted 69,899 apartments, equal to 44.6 percent.

The lowest-end apartments were priced below VND25,000,000 ($1,092). This type numbered only 28,294 units, making up 18 percent, which was too few for the total number of flats in 2016-21.

In 2020, a citizen of Ho Chi Minh City earned an average of about VND6.54 million ($284) per month, according to a research report published on Statista on August 13, 2021.

In fact, the number of affordable housing units has declined significantly since 2020, representing only one percent of the total apartments available on the market.

Last year, there was not a single affordable housing unit among the total 14,443 units available.

At the same time, 10,404 luxury apartments, equivalent to 73.98 percent, were offered for sale, the rest being middle-segment flats. 

This market structure clearly shows the imbalance between supply and demand, Le Hoang Chau, president of HoREA, said, adding that the market is filled with luxury housing while it is lacking in affordable units.

Chau believes the market imbalance will remain in Ho Chi Minh City in the coming years.

Although many workers and salaried employees are struggling to buy housing, the city is running out of affordable units, he remarked.

"In 2022, we need appropriate policies to help develop more affordable and social housing to balance the market," Chau advised.

"This will both meet housing demand and ensure social housing security."

Grade-C apartments cost up to VND60 million ($2,622) per sqm

The price of a grade-C apartment has increased 27 percent, making it difficult to buy an affordable apartment, according to Savills Vietnam, a real estate agency with offices in Hanoi, Da Nang, and Ho Chi Minh City. 

In 2021, apartments belonging to a grade-C project could be sold at VND56.5 million ($2,469) per sqm, up 27 percent year on year in terms of one square meter of carpet area. 

Only in the fourth quarter of last year, prices for some projects were below VND30 million ($1,311) per sqm, while the remainder fetched from VND37 million ($1,617) to VND60 million ($2,622) per sqm.

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Kim Thoa - Ngoc Hien / Tuoi Tre News


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