Affordable apartments disappearing in Hanoi, HCMC

By Ngoc Diem   November 6, 2023 | 07:30 pm PT
Affordable apartments disappearing in Hanoi, HCMC
Apartments in Hanoi's Ha Dong district. Photo by VnExpress/ Ngoc Thanh
Affordable apartments accounted for more than half of the total supply in Hanoi in 2015, but now make up only 5% this year.

In HCMC, there has been no new supply in the segment so far this year. The Ministry of Construction categorizes apartments that cost VND25-35 million (US$1,030-1,440) per square meter or less as affordable.

According to the Ministry of Construction, on average, an apartment with an area of 50-60 square meters in Hanoi costs VND2.5-3 billion (or VND51 million per square meter), and in Ho Chi Minh City the average price was VND3-3.6 billion (or VND60 million per square meter) in the third quarter.

Key reasons for the gradual disappearance of affordable apartments in Hanoi and Ho Chi Minh City, according to experts, include limited land funds what does this mean, scarce housing supply, high land prices, increased construction and labor costs, and real estate developers not being interested this segment.

The population density of Hanoi and Ho Chi Minh City has increased drastically since 2015, leading to escalating demand for housing, especially affordable apartments.

However, few projects have been launched in the past two years, according to Nguyen Quoc Anh, deputy general director of real estate trading website Batdongsan.

Nguyen Hoang Nam, general director of low-cost housing developer G-Home, said for nearly a decade, the market has experienced many "land fevers," or property price bubbles, especially in the 2018-21 period, pushing land prices up several times. Higher land prices have resulted in higher total input costs for apartment construction.

"Initially, developers might want to develop the affordable housing segment for quick liquidity and early cash flow. But while they’ve waited to complete legal procedures, land prices have increased rapidly, forcing them to move to mid-range and high-end segments to reach their expected profit margin," Nam explained.

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