Low-priced housing disappeared from HCMC market

The land fund is no longer available, the supply is declining sharply, the affordable housing segment for the people is narrowed to the point of almost "extinction". This is the fact that low-income people who want to buy cheap houses in Ho Chi Minh City are facing.

Vaguely affordable housing

According to some real estate experts, most customers are still vague about the criteria of how cheap housing is. Usually, only knowledgeable people in the real estate business are capable of making an assessment of this concept.

Mr. Ngo Quang Phuc, General Director of Phu Dong Group said that cheap houses must meet 2 factors. The first is how much the total value of the house is. The second is how much per every square meter the buyer has to buy. Only then can there be a basis to assess whether a buyer is cheap or not.

“Even in Binh Duong at present, the price of each 60m2 apartment is about 2,3 billion VND. Calculated the price per square meter worth nearly 40 million VND. With this price, it is not cheap apartments anymore.

Calculating is one thing, and buying a cheap home is a completely different story. Each young couple has the lowest income of about 30 million VND / month to consider buying a house in Saigon, ”Mr. Phuc said.

Mr. Nguyen Van Duc, Deputy Director of Dat Lanh Real Estate Company in Ho Chi Minh City also said that at present, in Ho Chi Minh City, the cheapest apartment must be between 1.5 billion VND and 2 billion VND, not 1 billion VND.

"Assuming that buying a house with 1.5 billion VND, each couple must accumulate 450 million VND, borrowing nearly 1 billion VND. Loans divided for 20 years pay interest of 10 million VND /month, and the original amount is nearly 15 million VND /month. For young couples today, buying a house in Saigon is really a burden” , Mr. Duc said.

Business does not care about this issue

Statistics of Ho Chi Minh City Real Estate Association show that, nowadays, affordable apartments are almost zero. In 2018, the statistics of cheap houses having a price from 400 million VND to 500 million VND is 2% , in 2019, this segment is almost "extinct".

According to Mr. Nguyen Van Duc, the common point of businesses is that if they apply for a project, they will focus on making high-priced houses to make a profit. Meanwhile, if they want to make the low-priced houses, the procedure is very complicated. The city land fund is no longer available, so businesses are making a profit from the most of it.

"Current businesses are profiteering, selfish, all for the benefit of their businesses, so no one is worried about working for the community, it is a common practice," he said.

In the same view, Mr. Ngo Quang Phuc said that the demand for cheap houses in society is huge but there is no supply. The reason is that no one creates the supply, while making social housing, the people cannot buy it because they do not meet the standards as well as procedures, policies and planning approaches.

“Enterprises that want to work on real estate must have three important things: land, finance, legal procedures. Try asking if there is fund land in District 1, whoever goes to building the low-priced houses (2 billion VND) to sell. If they want to build the low-priced house (2 billion VND), they must go to the suburbs; however, there is no land, the edge is no longer available. Supply is increasingly limited, so the affordable segment is almost sterilized”, Mr. Phuc said.

Assessing the current supply of the low-priced houses, Mr. Le Hoang Chau - Chairman of Ho Chi Minh City Real Estate Association affirmed that the supply of houses to the market declined, in which the low-priced houses did not have the supply to provide to the market. Supply is not enough for the demand, the ground price is pushed too much, the opportunity to have the houses for low-income people is decreasing.

“At this point, Ho Chi Minh City Real Estate Association continues to propose the solution to remove the difficulties for enterprises being inspected. Recently, The City and Central Agencies have released a series of projects to return to operation; however, most of them are real estate projects with high prices, not low prices”, Mr. Chau said.

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