Low-cost home buyers must be patient

Low-cost home buyers must be patient

Information about low-cost houses has been mentioned much lately, but the public wonders whether this housing model can develop and when low-income earners can approach such housing products.

The program to develop low-cost housing projects is moving at a slow pace due to several reasons, including failure to lure property developers.

A report of the HCMC Steering Committee for Housing Policy and Real Estate Market shows that the city’s government has in principle approved low-cost housing projects of six investors. When completed, these projects will supply around 8,760 apartments, addressing the need of over 31,000 people.

However, so far only the project called Hanh Phuc Residential Area in Binh Chanh District has got off the ground, but its progress is quite slow because of financial constraints.

Not to mention the financial capability of low-income people, finding a cheap condo in big cities like HCMC is a pipe dream.

Minister of Construction Trinh Dinh Dung said on the Government web portal that low-cost housing projects were feasible in vast and lowly-populated areas, enabling the development of low-rise houses to save construction costs.

Meanwhile, in populous cities like Hanoi and HCMC, it is impossible to build low-rise condo buildings. Therefore, construction costs are prohibitively high, making it hard to provide actually cheap houses.

With the current house prices, the majority of low-income people are unable to buy homes, the minister remarked.

Decree 71 of the Government has established a legal corridor for budget housing development. Particularly, the State will use funds from the central State budget to develop low-cost houses and introduce attractive policies to woo investors.

Tax and land use fee incentives and credit supports are offered to attract realty firms to invest in the low-cost housing model. Still, many businesses are not so keen on this program.

At a meeting with the HCMC Real Estate Association early this year, the municipal construction department admitted preferential policies for low-cost housing projects had failed to encourage investors to join this model. It is because of the longer time for capital recovery and low profit.

Moreover, the screening of eligible homebuyers is also an obstacle for investors. With commercial housing projects, investors can deal with any customer, but low-cost housing project owners can only sell houses to those in the list approved by State management agencies.

There is a suggestion that condos for lease should be built instead of cheap houses under social program, encouraging citizens to switch from buying to renting houses. The point is which policies will support investors as the capital recovery period of house-for-lease projects will be even longer than that of the low-cost housing ones.

In its housing development strategy, the construction ministry does set a goal to develop apartments for lease. However, only time will tell when this housing model will thrive in the market

The Saigon Times