Problems in planning and large gaps between land prices and incomes will pose challenges for the property market over the next few years, experts said.
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According to President of the Viet Nam Real Estate Association Nguyen Tran Nam, housing prices are still far beyond the incomes of a majority of residents.
The market had been focusing too much on the high-end segment with prices from VND40 million (US$1,750) per square metre, some even at VND100 million per square metre, Nam said.
Nam said that it was not easy to find homes priced VND20 million per square metre in Ha Noi and HCM City. However, demand for this segment accounted for 80 per cent of market demand.
According to Numbeo, a crowd-sourced global database, Viet Nam’s property prices were the fourth highest among 99 countries on property price to income ratio coming after Venezuela, Syria and Hong Kong.
Experts at a conference late last year warned about the widening gap between housing prices and incomes. Deputy Director of Dat Lanh Land Nguyen Van Duc said that if no improvements were made, the number of people who could not afford a home could increase rapidly. “This might be a crisis,” he said.
A report by the World Bank titled “Vietnam Affordable Housing – A Way Forward” published in December 2015 said that Viet Nam still had a substantial deficit of quality housing with almost 20 per cent or approximately 4.8 million households still in poor conditions.
The report said amid rapid urbanisation with an estimated 374,000 additional housing units needed in cities each year to cope with demand, adequate supply of affordable housing would be integral to achieving national development targets and maintaining a growth rate.
According to Nam, the Government should devise long-term policies to reorient housing development and lending towards the affordable and social housing segments.
Nam said that another headache was planning and attention should be paid to population density in urban areas to ease pressure in the infrastructure system.
“High-rise buildings are essential to urban areas. The important thing is planning,” Nam said.
If there were three lots of land, one 45-storey building in one slot and the two others for infrastructure parks would be a better option than developing 15-storey buildings in all three land slots, according to Nam.