The local residential market is undergoing a positive development: affordable housing is on the rise, according to the consulting firm CB Richard Ellis.
In a report released on Tuesday, the firm found that a wave of low-cost housing projects broke ground in Hanoi during the third quarter revealing a movement toward more affordable residential options.
The report authors also said that a new regulation (which caps the proportion of units sold via capital contribution contracts at 20 percent) is expected to help the market by enhancing transparency, placing pressure on developers with low financial capabilities, reducing the threat of price bubbles, and limiting speculative forces.
In the third quarter, the market was quieter with fewer new projects launched. Only 1,950 units were added to the market compared to last quarter's 4,600 units, the report indicated.
The capital city expects to see the launch of 3,000 units in the fourth quarter, bringing total new supply in 2010 to nearly 16,000 units, it said. Following the opening and improvement of major infrastructure routes, western and southern districts are attracting new residents with easier access to core urban districts.
Meanwhile, the fastest-growing segment of the real estate market in Ho Chi Minh City is also affordable homes.
"Twelve affordable projects were launched in the third quarter with asking prices ranging between US$563 and $923 per square meter," CBRE said in a separate report, released on Wednesday.
"Despite the up-tick in inflation seen in the third quarter, the base of Vietnam's economy is strong," said Marc Townsend, managing director of CBRE Vietnam.
Commenting on the trend toward the affordable segment of the market, Rudolf Hever, associate director of Research and Consulting, said it's clear that "as the Vietnamese economy continues to grow, and incomes increase, there is pent-up demand from people who were previously priced out of the market."
He said the government has made a lot of effort to support the residential property market, including measures to increase transparency and increase the availability of loans.
"All these efforts work together, encouraging prospective home buyers to look at new and existing developments as a realistic option," said Hever. "As these affordable projects achieve critical mass, the availability of facilities and amenities in these areas will increase too."