Saigon authorities admit to shortage of housing for low-income earners

By Phuong Dong   September 17, 2019 | 10:15 pm PT
Saigon authorities admit to shortage of housing for low-income earners
A family of five squeezes in a rented place of three square meters in Ho Chi Minh City. Photo by VnExpress/Quynh Tran.
Building low-priced apartments is one of the key tasks for Ho Chi Minh City in future, its leader has said.

HCMC, Vietnam's biggest city and main economic hub, is home to around 13 million people including four million immigrants.

"Each year the city's population rises by 200,000 and in average, it would be one more million every five years, putting huge pressure on urban management, social and technical infrastructure and, especially, housing," the city's People’s Committee Chairman Nguyen Thanh Phong said at a city meeting on Tuesday.

Its population density now is 4,289 per square kilometer, which is 14.7 times the country's average, he said.

While the dwelling area per capita has increased sharply over the past decade from 14.3 square meters in 2010 to 20 sq.m now, most blue-collar workers, especially migrants, still live in small, rundown places, Phong said. "Most of them are unable to own a house or even rent a proper one."

So it is necessary to build low-priced apartment using public money for low-income earners and migrant workers, he added.

Deputy Minister of Construction Nguyen Van Sinh concurred, saying the number of families owning no houses or living in tiny places in the city remains high.

Meanwhile, many housing projects are stuck at the stage of clearing lands and paying compensation and have fallen behind schedule.

Sinh called on the city to adjust its land-use plans, make good use of medium- and long-term development funds and join hands with private investors to build low-income housing.

Yap Kioe Sheng of the Asian Institute of Technology said at the meeting a majority of people living in HCMC now cannot afford to buy or even rent the cheapest houses built by private developers.

Private developers are not interested in low-priced products because of their low profits and, besides, the demand for higher-priced housing keeps them busy enough, he said.

"To develop low-budget apartments, the city should have state agencies, non-profit organizations and private companies working together."

But he admitted it would be difficult to develop apartment projects that could meet all criteria like low cost, decent location and simple procedures in terms of ownership for low-income earners.

From what he observed in several countries in the region, public housing projects are usually on a large scale to enable more people to buy, and governments have large subsidies to support buyers.

At an earlier city meeting in March district authorities told city's party chief Nguyen Thien Nhan that the number of migrants moving into their localities has kept rising, posing security problems.

Nhan replied that each district has to look at its own conditions and develop social housing programs to meet the high demand from migrants to ensure they have decent living conditions, which would guarantee security.

Apartment prices in the city have risen by more than 50 percent across all segments since 2015, city-based real estate firm DKRA said in a recent report. They would continue to increase, it said.

The average cost of a mid-priced apartment rose from VND21 million ($900) to VND32 million ($1,380) between 2015 and August 2019.

In the affordable segment, prices have increased from VND16 million ($690) to VND24 million ($1,030). In the last 12 months they have risen by 9 percent.

Prices are expected to keep rising due to a short supply since projects are taking a lot of time to complete legal procedures even as demand remains strong given the high net migration to the city, DKRA noted.

The city construction department has predicted demand for housing at 40 million square meters in 2016-20 and 45 million square meters in the next five years.

It said housing plans would be tweaked to replace villas and other high-priced housing with low-budget projects and multi-storied condos.

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