To cut the oversupply of high-income housing, the Construction Ministry has proposed a temporary nationwide halt to the construction of all commercial housing projects that have completed less than 30 percent of their site clearance.
The ministry said that local governments should also consider halting other projects that have completed up to 70 percent of their land clearance work.
The biggest problem is that Vietnam currently faces an oversupply of luxury housing while low-income earners have practically nowhere to live in the country's major cities and towns.
The ministry thus suggested that many projects that have nearly finished site clearance works be restructured to suit low-income needs. None of said projects were originally developed to provide low-income units.
Developers of these projects should shift to affordable housing units of less than 70 square meters with a limited cost of VND15 million (US$711.7) per sq.m, it said.
However, commercial apartments measuring less than 45 sq.m. are not legal.
Authorities in locales that are home to very few real estate projects may be eligible for exemptions from the ban, according to the ministry.
As of June, Hanoi had around 9,650 unsold units, of which apartments accounted for nearly a quarter, a VnEconomy report said, citing official data.
In Ho Chi Minh City, inventory of apartments alone hit over 12,610 units.
A Savills report for the last quarter said that Hanoi market’s performance showed signs of “improvement.” Average prices decreased by 30 percent from the same period in 2011.
Hanoi’s property price index decreased last month for an eighth consecutive quarter, and by 25 percent since its peak in 2011.
During the same period, HCMC saw an increase in transaction volume, which is a sign that the market is “recovering.”
Due to rising supply of low-end apartments, average prices went down by 21 percent from early 2009 when Vietnam’s housing market came to a standstill.
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