High Prices Push Buyers to the Brink

Dang Trung and his wife have been searching for a two-bedroom apartment priced under VND3 billion for the past four months, but their efforts have been in vain. The cheapest option they found, a 60 sq.m unit in the southern part of the city, was priced at VND3.3 billion.

Nam's family has been on a similar quest since July, examining 10 projects more than 10 kilometers from downtown, but they too could not find an apartment for less than VND3 billion. Even a one-bedroom unit in Thu Duc City costs VND3.4 billion.

"It is so difficult to buy a house nowadays. Prices are mostly high, while affordable projects are either located poorly or have shady legal status," Nam said.

The Disappearance of Affordable Housing

Since 2018, with prices in HCMC rising relentlessly, apartments priced under VND1 billion have been disappearing. The same began to happen to VND2-billion apartments in 2020, and now it is the turn of units priced below VND3 billion.

An apartment project in Binh Tan District sold a two-bedroom unit at around VND3 billion in early April, but has now raised the price to VND3.5 billion. In the eastern part of the city, virtually no apartment project lists at below VND3 billion.

Consultancy Insights

A recent report by property consultancy DKRA Group said the minimum price on the primary market is VND55 million per square meter, which means a 60-square-meter apartment costs VND3.3 billion. Data from consultancy One Housing shows that in the third quarter of this year the average price of apartments was around VND80 million per square meter since 90% of new supply was in the high end.

Cushman & Wakefield, another consultancy, also said that apartments priced at less than VND60 million per square meter (or VND3.6 billion for a two-bedroom unit) might soon go extinct in HCMC.

The Impact on Buyers

This creates a major gap since half of all prospective buyers are only able to pay a maximum of VND2 billion, a recent survey of 3,100 online readers by VnExpress found. Data from property consultancy Savills shows that the VND3-billion segment now accounts for only 15% of supply and will not exceed 5% in three years' time. Soon it might disappear, the company said.

David Jackson, CEO of consultancy Avison Young Vietnam, said VND50 million per square meter is now considered the floor for mid-range apartments. Rising land development costs and changes in regulations such as increased land fees and acquisition costs, are pushing prices upward, he said.

With construction costs continuing to rise, developers are forced to balance cost and profit, making affordable housing increasingly scarce, he added.