The reasonable price for apartment buildings is 25 million VND/m2. Photo: Quang Vinh.
Apartment prices continue to rise
Ms. Le Quynh Hoa (Ha Dong district, Hanoi) said that she wants to buy a 2-bedroom apartment in Ha Dong but has not been able to do so for over a year.
“I have worked and saved more than 1.9 billion VND but this amount is not enough to buy a 50m2 apartment in Ha Dong. Most apartment prices nowadays are around 3.6 billion – 4.2 billion VND for a 2-bedroom apartment. The price for an apartment that is over 40 million VND per m2 is too high” – Ms. Hoa said.
Many people who want to buy a house also believe that the price of apartments at 25 million VND is reasonable, so that people can afford to buy a house.
In recent years, high-end housing projects in major markets such as Hanoi and Ho Chi Minh City have still attracted certain attention from investors. However, the current market demand does not lie in the luxury or high-end segment.
According to the Ho Chi Minh City Real Estate Association, it is necessary to restructure the market segment and reduce the selling price of housing products that are suitable for people’s income, in order to jointly overcome difficulties and help the market develop safely, healthily, and sustainably.
The association has noticed that real estate businesses “have not been actively implemented” as commented by the Prime Minister. Meanwhile, since 2018, the association has issued recommendations for businesses to invest in the segment of medium and small housing markets with prices to meet actual housing needs, have high liquidity, and sustainable development.
The association proposes that real estate businesses reduce the selling price of housing products, reduce profit expectations, and not “maintain high prices”.
Businesses need to invest in the affordable housing segment that is suitable for people’s income. Businesses also need to participate in implementing a program to develop at least 1 million social housing units in the period 2021 – 2030, in order to access a 120,000 billion VND credit package with interest rates lower than 1.5 – 2% compared to normal commercial interest rates.
Mr. Matthew Powell – Director – Savills Hanoi believes that investors need to consider the actual conditions of the market and diversify housing products, instead of bringing similar projects with limited facilities to the market, which does not provide residents with a convenient life.
Because well-planned projects with good construction quality and diverse utilities that are friendly to residents are often more successful than projects that focus on large scale and set high prices. Everything needs to start from real needs and target markets, where quality, design, and utilities are the top concerns.
Collaboration is the key
In order to lower housing prices, Mr. Nguyen Van Dinh – Vice Chairman of the Vietnam Real Estate Association, Chairman of the Vietnam Real Estate Brokers Association believes that restructuring segments and achieving goals requires cooperation, unity in views, implementation methods, and coordination of multiple parties, from government agencies to businesses, banks, etc.
Regarding government agencies, according to Mr. Dinh, it is necessary to study plans to shorten investment and construction administrative procedures; consider solutions to support businesses in stages of land use fees and land clearance. These are two items that account for a large proportion of costs for investors, directly affecting the cost of real estate.
In addition, the State Bank needs to study the construction of a credit program with preferential interest rates specifically for investing and developing affordable housing segments; to have specific mechanisms, policies to support investors if they want to restructure projects towards shifting from high-end to affordable or social housing.
Mr. Le Hoang Chau – Chairman of the Ho Chi Minh City Real Estate Association believes that people are always ready to “spend money” to buy houses, whether the State or the bank has support policies or not. Therefore, the issue here is how to ensure that the price of the house is reasonable. Meanwhile, real estate businesses – the direct subject, also need to take immediate and specific actions, which is to restructure housing products towards real needs and reduce selling prices that are suitable for people’s income.
According to the sharing of Ms. Duong Thuy Dung – Senior Director of CBRE Vietnam, the price could be reduced when we further increase the proportion of supply of mid-range and affordable apartments, and reduce the proportion of high-end apartments. CBRE Vietnam also believes that besides reducing prices, it is necessary to promote transactions and liquidity for the market through interest rate tools.
According to real estate businesses, after the Lunar New Year holiday, the level of interest in real estate has quickly increased. Specifically, compared to the beginning of 2023, the real estate market in the early part of this year has shown positive signs, especially in terms of interest and the number of listings. The demand for searches in January 2024 increased by 66% compared to the same period in 2023, and the number of real estate listings also increased by 52%. It is noteworthy that in Hanoi and Ho Chi Minh City, land plots and project land plot had a higher level of interest than apartments. Specifically, in January 2024, the demand for land plot searches in Hanoi increased by 110%, and the demand for project land plot searches increased by 77% compared to the same period last year. Meanwhile, the demand for apartment searches in Hanoi increased by 71%. Similarly, in Ho Chi Minh City, the demand increased by 71% – 73% for land plots, project land plots, and only increased by 59% for apartments.
