(for illustration only. Photo: Vietnam+)

Commercially built apartments have become more popular with low-income buyers than social housing, as prices of the former have dropped substantially in recent years, according to real estate experts.

Many commercial housing projects in Hanoi and Ho Chi Minh City have lowered prices to 10-14 million VND (476-667 USD) per square metre, nearly equal to social housing costs.

Even though some developers of social housing have benefited from the Government's preferential policies, the price of those apartments remains relatively high.

Apartments in the Tay Nam Linh Dam social housing project in Hanoi, for example, sell for 12 million VND (571 USD) per square metre.

Dr Pham Sy Liem, general secretary of the Vietnam Construction Association, acknowledged that there is a significant price difference between commercial and social housing apartments.

He explained that the price of privately built apartments was based on market supply and demand, while social housing depended more on construction costs.

In addition, even though developers of social housing enjoy benefits such as lower taxes and interest rates on bank loans, and are not obliged to complete procedures changes in land-use, they are constrained by State policies and regulations.

Nguyen Dinh Lam, deputy director of the Dat Xanh Real Estate Company, explained that social-housing developers are not allowed to adjust their product prices based on market fluctuations in demand and supply.

In addition, buyers of apartments in social housing projects must meet strict conditions, which limits sales, said Tran Hong, deputy director of the Social Housing Development Company in Hanoi.

A representative of a real estate company in HCM City , who declined to be named, also pointed out that social-housing apartments are often large in size and priced too high for low-income earners.

He proposed that the construction ministry build social housing units of less than 45 sq.m each to meet demand.

Senior economic expert Nguyen Minh Phong said that social housing apartments would eventually become more attractive to buyers after several Government policies became effective.

He said the Government has approved plans to lower income taxes, corporate taxes and value-added taxes. Land clearance costs are also expected to drop.

As a result, construction costs for social housing projects would drop. Van Muon, deputy director of the Thien Co Real Estate transaction floor, said the competition in the market between the social-housing and private property segments would ultimately help cut costs, and thereby lower prices to an affordable level for lower-income apartment buyers.

Source: VNA