The Rising Cost of Social Housing

14 June, 2025

The Rising Costs of Social Housing

Skyrocketing Prices of Social Housing Projects

The investors of the Upper Thanh Social Housing Project (Rice City Long Chau) in Long Bien District, Hanoi, have announced an average selling price of approximately VND 26-27 million/m2. With this price tag, the project becomes the most expensive social housing development in Hanoi to date.

This means that a 70m2 apartment in this social housing complex would cost nearly VND 1.9 billion.

The Rice City Long Chau social housing project in Long Bien, Hanoi, with the highest construction cost to date.

Previously, the social housing project with the highest announced temporary price was N01 Ha Dinh (in Thanh Tri District), at VND 25 million/m2, followed by NHS Trung Van, which was launched at VND 19.5 million/m2.

In contrast, social housing projects from five to ten years ago had price ceilings of below VND 15 million/m2.

Mr. Chu Van Hai, Head of the Social Housing Development and Management Division at the Department of Housing and Real Estate Market Management under the Ministry of Construction, shared that the prices of social housing projects vary depending on the design requirements set by the investors and the project’s scale. Social housing in Hanoi used to be priced below VND 20 million/m2. However, this is no longer the case due to increased labor and construction material costs.

Mr. Hai further explained that social housing is a segment supported by government policies aimed at reducing costs. Nevertheless, this type of housing must adhere to the same quality and standard criteria as commercial apartments. The differences between the two segments lie in factors such as area and design.

Housing Prices Surpass the Affordability of Target Buyers

Nguyen Quang Hung, a worker in Hanoi for almost eight years, has saved over VND 600 million. He believes that the price range of nearly VND 1.5 billion to nearly VND 1.9 billion for a social housing apartment is still very high for those with a monthly income of less than VND 20 million.

“With the price of nearly VND 1.9 billion, if I want to buy an apartment, I will have to borrow VND 1.3 billion. Putting aside the borrowing process, at the current interest rate, I will have to pay more than VND 200 million per year (principal and interest). With the difficult economic situation and rising expenses, this is indeed a challenging equation,” shared Hung.

According to Mr. Nguyen Anh Que, a member of the Vietnam Real Estate Association, there are two main reasons for the high cost of social housing: increased construction costs, including building materials and labor expenses over the past few years, and changes in the calculation of social housing profits and land taxes for the 20% commercial area within social housing projects as per Decree 100/2024 compared to Decree 100/2015.

To illustrate the impact of the decree change, let’s consider the approved selling price of two projects: the NHS Trung Van social housing project, which was approved at VND 19.5 million/m2 under Decree 100/2015, would have been approximately VND 27 million/m2 if calculated under Decree 100/2024.

“For investors building social housing for workers or in districts and provinces, where the selling price of social housing is below VND 15 million/m2 and the selling price of commercial apartments is below VND 20 million, the profit margin is not significant. However, in large cities like Hanoi, Ho Chi Minh City, Hai Phong, and Danang, the approved selling price of social housing can reach up to VND 27 million/m2, and the 20% commercial land within the project can be sold at nearly VND 100 million/m2…,” explained Mr. Que.

Therefore, Mr. Que proposed combining the profits from the social housing portion and the 20% commercial land portion, as was done previously, and increasing the profit margin for social housing developers to 13%. He also suggested that the government consider exempting the 5% value-added tax on social housing.

“I believe that if these proposals are accepted and implemented, the social housing project at 214 Nguyen Xien will have a selling price of below VND 20 million/m2, and the Rice City Long Chau project will be below VND 21 million/m2…,” Mr. Que added.

Mr. Que also mentioned that Decree 100/2024 stipulates the income conditions for individuals to be eligible to purchase social housing: the household income must be below VND 30 million/month, and for single individuals, the income must be below VND 15 million/month. These criteria are suitable for cities of grades 1 to 4 but not for centrally governed cities, especially Hanoi and Ho Chi Minh City, as the living expenses, particularly rental costs, are much higher in these metropolises.

Consequently, Mr. Que recommended that the income threshold for households in centrally governed cities be increased to below VND 50 million/month and VND 25 million/month for single individuals. For cities graded 1 to 4, the income criteria should remain as per Decree 100/2024.

Ngoc Mai

– 08:29 14/06/2025