Apartment prices to remain high for long time

[Kim byoungil]

Apartment prices to remain high for long time: association

By Ngoc Diem   February 12, 2024 | 04:08 pm PT

Apartment buildings in Ho Chi Minh City. Photo by VnExpress/Quynh Tran

Apartment prices will not likely drop in the upcoming years due to a shortage in affordable supply and high demand in major cities.

Housing supply in Vietnam has dropped from 180,000 in 2018 to 55,000 in 2023, according to the Vietnam Association of Realtors.

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The majority of new supply are high-end units priced from VND40 million ($1,643) per square meter, while the affordable segment, priced VND25 million per square meter, has almost disappeared.

Affordable apartments accounted for 30% of total housing in 2019 but the ratio dropped to 6% last year.

The lack of affordable supply amid high demand for it has caused apartment prices to surge to new levels and exceeded the payment capability of people with real needs for housing, VARS said.

Although it has been suggested that developers should lower their prices and authorities should tax speculators, these proposals will not likely help bring prices down, it added.

As most apartment buildings are located in populated districts where construction and land prices are high, developers must sell their products at high rates to be profitable.

Taxing the property of speculators will not be effective as demand for urban housing is always high and prices in the long run will still be high.

The only way for prices to fall is for young people to start to buy homes in the outskirts, which will lower demand in the central districts, VARS said.

It proposed that authorities start developing outskirt areas by building more roads, focusing on public transport and planning new towns, it added.