More affordable housing needed in HCM City

The real estate market in Ho Chi Minh City is on track to bounce back, but its sustainable development will only be ensured if housing demand from low-income and average-income earners is satisfied, a report from the HCM City Real Estate Association (HOREA) has said.

The report, sent to the municipal People’s Committee early this week said there would be stronger investment this year in social housing and affordable commercial housing projects, as well as serviced apartments, office space and industrial properties, thanks to the anticipated liberalization of trade under the upcoming Trans Pacific Partnership agreement.

According to the report, the city has a total of 1.8 million households and a population of 10 million. Many of these people need either rental or owned property, especially the 3 million who are migrants; the 200,000 government employees, particularly those working in the education and health care sectors; and the approximately 50,000 couples who are newly married each year.

Photo for illustration

However, the supply of apartments of one or two bedrooms priced at around VND 1 billion (USD 45,000) is still limited.

Early this year, the State Bank of Vietnam issued an adjusted Circular 36 which constrains credit in the property market.

Since February, commercial banks have increased deposit interest rates to over 8 percent annually for terms longer than 12 months.

Therefore, the lending interest rate might go up by one or two percent, HOREA Chairman Le Hoang Chau said.

According to current regulations, commercial housing projects of 10ha or more are required to allocate 20 percent of the land to social housing, which may not be suited to specific projects.

The association suggested an option whereby project investors could develop social housing inside their projects, exchange land lots or apartments of equal value at other locations, or pay the required 20 percent land allocation in cash.

HOREA also proposed that project owners be allowed to assign the development of the social housing responsibility to an affiliate without carrying out procedures to transfer that part of the project to the affiliate.

It is also recommended longer-term loans, from the current 15 years to 20 years for loans given to buyers of social housing.

Before decisions are made on resettlement projects, HOREA suggested that families that need to be resettled should be surveyed about their wants, their housing demands, vocational training needs, and their ability to earn a living in order to ensure that the new location fits their needs.

Currently, there are vacancies in resettlement projects, including Vinh Loc B, which offers 1,939 apartments and 529 house lots.

But only 306 units and 222 lots have been handed over to resettled households. The reasons include poor project quality and a lack of support facilities, transportation links and opportunities to earn a living. The residents are also unable to pay for the new units, which are larger (42 to 68sq.m in Vinh Loc B) than their previous ones, usually around 20sq.m.

The resettled residents should be provided preferential loans of 15 years to buy the larger units, HOREA said.

Nearly 2,100 apartments in the program to build 12,500 units for resettlement work in the new Thu Thiem Urban Area have been handed over to owners.