Social housing prices double amid growing scarcity

By Anh Tu   April 21, 2023 | 04:41 am PT
Social housing prices double amid growing scarcity
The Rice City Linh Dam social housing project in Hanoi’s Hoang Mai District. Photo by Vu Luan
High demand but little supply have driven the prices of social housing apartments in Hanoi to double the levels of five to seven years ago when they were first sold.

Hoa applied to buy a social housing apartment at the Rice City Linh Dam project in 2014, and the price at that time was around VND15 million (US$638.42) per square meter.

The 63-square meter apartment, situated in a prime location, cost less than VND1 billion.

In 2015 she moved into it, and after five years, in 2020, when she became eligible to sell it, she sold it for more than VND1.5 billion for a profit of 60% profit.

Since then social housing prices have continued to increase and currently stand at VND32-35 million per square meter, 130% up from the original prices.

The prices at Rice City Linh Dam have almost caught up with those of apartments at nearby commercial projects such as CT3 HUD3 and Rainbow Linh Dam.

CT3 HUD3 prices have risen by 35-50% in the last 10 years, while at Rainbow Linh Dam, they have gone up by 60%.

Prices at many other social housing projects have also risen relentlessly in recent years.

Dang Xa in Gia Lam District, the city’s first social housing project, was sold in 2013 at VND9 million per square meter.

Now apartments there cost at least VND18 million per square meter.

Prices at Ecohome 1 project in Bac Tu Liem District currently stand at VND25 million, up from just over VND10 million in 2013 when they were sold. They were handed over to buyers two years later.

The smallest apartment here, measuring 36 sq.m, now costs some VND1.1 billion or VND30.5 million per square meter, and the largest, measuring over 65 sq.m, goes for 1.8 billion.

In 2015 and 2019 the developer of Ecohome 1 built two other social housing projects in the same area and sold them at VND13 million and VND16.5 million.

In the market, many of these apartments now fetch over VND30 million per square meter, or equivalent to the prices of commercial apartments three kilometers away.

Even social housing projects that did not sell well in the past have seen their prices rise subsequently.

At an average price of VND10 million per square meter, the Bamboo Garden project in Quoc Oai District only managed to sell less than half of its apartments despite multiple attempts in 2017.

But prices there have nearly doubled and now exceed VND19 million.

On the primary market too, social housing prices have gone up recently.

Last month the developer of a project on To Huu Street, Nam Tu Liem District, opening sales at VND19.5 million per square meter, the highest ever in the segment in the city.

However, even at this price the number of applications for buying and renting apartments was 10 times the availability, the developer revealed.

The price hike is attributed to high demand in the market, Nguyen Manh Khoi, deputy director of the Ministry of Construction’s Housing and Real Estate Market Management Agency, said at a recent conference.

The country is forecast to need 2.4 million social housing units by 2030. Of 2.7 million workers in industrial parks, 1.2 million do not have houses.

The country only has 155,800 units for workers and social housing.

Tran Duy Do, a manager at a social housing development company in the north, explained that there are few mid-range commercial apartments at VND25-30 million per square meter, and so social housing helps fill the gap.

According to real estate consultancy Savills Vietnam, last year Hanoi only built 12,600 new apartments, the smallest number in the last eight years, and more than 80% of them were in the mid-priced segment.

The average price in the primary market is VND47 million.

Across the country, low-income housing accounted for only 5% of supply last year with just nine social housing projects with 5,500 apartments being developed.

Of them, only 2,800 were for sale, and were snapped up as soon as they were offered.

In early April the government approved a plan to build one million social housing units by 2030, including 428,000 by 2025.

This is expected to help keep housing prices affordable for low- and middle-income people in urban areas and workers in industrial hubs.

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