Experts warn of housing imbalance amid growth
Experts warn of housing imbalance amid growth
Amid the recovery of the real estate market, experts have rung early alarm bells about the risk of supply and demand imbalance by the recent boom in high-end housing projects.
Dang Hung Vo, a real estate expert, said at a recent workshop that the Viet Nam property market was still witnessing unbalanced development with developers focussing on high-end housing rather than affordably priced apartments.
He estimated that between 2016 and 2018, the market would receive nearly 80,000 housing units, 70 per cent of which would be in the luxury segment.
This would be a problem, considering the country's high demand for housing for low-income earners, experts said. The construction ministry forecast that Viet Nam would need around 1 million square metres of housing space for low-income earners, but the current supply was only around 10,000 units per year.
The low-priced housing segment supported the revival of the property market in 2013 and 2014 from a protracted downturn, but was now seemingly neglected by a number of property developers due to eclipsed profits, economic expert Vo Tri Thanh pointed out.
Nevertheless, high-end properties appeared to be the most attractive destination last year for investments, property experts agreed.
High-end property projects were aimed at not only those who were seeking high-quality living standards but also at those who were hunting for profitable investments.
Encashing on the trend, during the recent months, property developers rushed to release sales of many luxury housing projects highlighted by ideal living environment and guaranteed profits, especially in big cities. In addition, the market also received the launches of new types of luxury property products like shop-houses, mini villas, resort townhouses, farmhouses and officetel apartments.
According to Le Hoang Chau, president of HCM City Real Estate Association, the property market was on a recovery path but there existed uneven development among different segments.
The high-end segment during recent months witnessed an abundance of supply while affordable housing projects faced shortages, Chau said.
Attention should be paid to this problem, Vo said, although both market watchdogs and experts affirmed that a property bubble could not return next year, and the property market was on a firm recovery track driven by the improved macro-economy and improved property policies and credits.
The Viet Nam Real Estate Association said that property developers should strictly following the government's housing development strategy to ensure healthy development of the realty market and avoid the mistakes of the past which resulted in high inventories and market stagnation.
Jeff Foo, president of the Association of Singapore Realtors, was quoted by Dau Tu (Investment) newspaper at a recent workshop that new government's policies should ensure a more balanced, transparent and sustainable market.
He said that foreign investors were also concerned about changes in policies in the next five or ten years when Viet Nam joined the free trade agreements.
Affordable housing
According to the Ministry of Construction, the bottleneck in the property market was a supply and demand imbalance and to tackle the problem, developing affordable housing projects was a core solution.
A report titled "Viet Nam Affordable Housing – A Way Forward" recently launched by the World Bank urged the development of a national affordable housing programme for maintaining high economic growth, citing that almost 20 per cent of households are still living in poor conditions.
However, developing social housing projects was of little interest to property developers due to inconsistencies in policies and unattractive profits, a conference heard on Thursday in HCM City.
Experts at the conference urged more incentives to be given for social housing projects together with the diversification of social housing types.
According to Huynh The Du, from the Fulbright Economics Teaching Programme, residents could only spend between 30 per cent and 40 per cent of their total income for housing purchases, so the housing prices should be at that affordable level.
However, in Viet Nam, there remained a huge gap between housing prices and incomes of residents, which make housing unaffordable to people with a monthly income of less than VND7.7 million (US$340). Du said that only those with a monthly income of VND32 million ($1,400) or higher, could afford comfortable homes.
Nguyen Xuan Quang, chairman of Nam Long Investment Jsc., said that policies and incentives should be favourable to property developers to encourage investments in social housing projects.
According to Chau, the land for developing social housing projects must be expanded to the outskirts where land was readily available. The housing development programme should not rely only on 20 per cent of area which was compulsory designated for social housing development in property project, he said.
