Owning a home still a dream deferred

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Sky-high real estate prices make buying a house or apartment nigh on impossible for many in Ho Chi Minh City


A woman rides a trishaw past a residential building for low-incomers in Ho Chi Minh City's District 12. Seven million people are in need of a combined housing area of 150 million square meters in Vietnam's big cities.

Nguyen Hoang Hai moved from the Mekong Delta province of Ben Tre to work in HCMC ten years ago. Now a deputy media manager for a foreign company, he still does not have an apartment to call his own.

Hai said with his monthly salary of VND7 million (US$370), he will have to work hard and live a simple and frugal life for a further ten years before he can buy an apartment.

Even then, he can only afford to pay not more than VND1 billion ($52,700) and he must remain single and in good health, he said.

For Tran Hung, who is a permanent resident of the city, buying an apartment is a dream that he has already given up on.

He said his family of ten used to live in an old 70 square-meter apartment in District 10. As the place became too crowded for the whole family, he and his wife decided to buy an apartment of their own.

After years of saving, they had VND300 million and started to look for an apartment. Hung said to their disappointment, the cheapest one they could find cost VND500 million and they were not eligible for installment payment plans either.

Hung said the average price for an apartment is VND16-17 million per square meter. "With prices that high, I can't afford an apartment even in my dreams," he said.

Faced with such circumstances, Hung and his wife stopped thinking about buying their own place. Now they rent an apartment for VND3 million a month.

 Unfortunately, it's not uncommon to hear of similar broken dreams when it comes to buying housing in big cities.

Tran Quang Tuan, director of Minh Khoa Construction Company, said for people whose salaries range between VND5 million and VND10 million, relatively high incomes in Vietnam, it is difficult to save enough money for home purchases after paying the necessary living expenses.

It's not even easy to apply for home loans with such salaries, he said. For fresh graduates, the chance to buy a house is very low, if not non-existent, considering most apartments cost at least VND600 million, he added.

Architect Tran Huynh Duc said the problem exists mainly because housing projects have not been managed well, leading to high construction costs and hence high prices.

After properties have passed into the hands of speculators, the end users have to pay much higher prices, he said.

Property prices in Vietnam have grown out of proportion and are far above their real value as the market has not been managed properly, a group of government advisors said in a report published last month.

The report also said urban migration has increased housing demand in big cities around the country, with seven million people in need of a combined housing area of 150 million square meters.

According to the HCMC Construction Department, the fast growing population has strained the city's lacking housing supply.

Market research firm VietRees said around 8,500 new apartments will be available in the city this year and then 10,000-15,000 more next year.

The supply of low and medium-priced apartments will increase four times this year compared to 2008, accounting for 37 percent of total apartments in the market, VietRees said. But the firm argued that these figures were still too low given the vast demand for housing in the city.

DEVELOPER CHIDES REJECTION OF SMALL APARTMENTS

A property developer whose proposal to build 20 square-meter efficiency apartments was recently rejected by Ho Chi Minh City authorities has called the decision "unreasonable.


Customers view a 20 square meter model apartment built by Dat Lanh Company in Ho Chi Minh City

Nguyen Van Duc, deputy general director of Dat Lanh Real Estate Company, was quoted by the Vietnam Economic Times on Tuesday as saying that the reasons given by city authorities were not convincing enough.

Duc admitted that the proposal was not in accordance with Vietnam's Housing Law, but he argued that was why the company had to seek permission from the government. Laws have to be amended all the time to "better reflect reality," he said.

According to the city People's Committee, Dat Lanh's proposal was in violation of a regulation stipulating that an apartment must have a minimum area of 45 square meters. The administration also said that super small apartments were not suitable for the development of the city and would create more urban management problems.

The proposal is also a step backward from the goal of improving living standards for residents and increasing per capita housing area in the city to 26.9 square meters in 2015 from the current 25.7 percent, the committee said.

The rejection was announced even though Vietnam's Ministry of Construction had approved the proposal in late May. The ministry had then asked the HCMC administration to provide guidelines for Dat Lanh to develop 20 square-meter apartments on a trial basis.

Duc also said the average housing figures presented by the authorities were not important. He argued that what really mattered was increasing the minimum housing area for residents in the city, he said.

Duc said management should not be a concern either. If small apartments are banned only because of concerns that they cannot be managed, it will be a huge loss for people who are struggling with housing problems, he said.

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