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Vietnam's Expensive Housing Risks Affordability Crisis
In some Vietnamese cities, it is not hard to find apartments that cost millions of dollars. But on the same streets, small, poor houses made of metal sheets can be seen.
The low end and the high end of the country’s property market are well established. But, what about all the other people in between the two extremes?
Need for affordable housing
The growing middle class and working class in Vietnam have an increasing demand for new housing. If this demand is not met, the country could experience the kinds of affordability crises seen in countries like Brazil or Ireland.
Jones Lang LaSalle Incorporated is a real estate services company in Vietnam. Its data show that there is more housing in the luxury, premium and middle-end price level available on the Ho Chi Minh City market this year. And there is not as much housing that is affordable.
Some real estate developers are starting to pay attention to this demand. Phu My Hung Development Corporation seeks to sell homes to middle class buyers. It is raising about $75 million to develop a town in a rural area about 60 kilometers away from the capital, Hanoi.
Gary Tseng is the chief executive of the Phu My Hung Development Corporation. He said the investment will help the business develop new townships using a sustainable growth model—meaning environmentally friendly.
The real estate developer takes its name from an area of southern Ho Chi Minh City known for organized city planning. Tseng said the Phu My Hung area is a model of “a sustainable city with efficient water, power, and transit” that “can and should be” copied.
More apartments in the luxury, premium and middle-end price levels have come on the market this year in Ho Chi Minh City, but not as many at the affordable level.
Townships like Phu My Hung are built up from nothing. This is unlike places such as the United States, where many older houses regularly are bought and sold. In Vietnam, the real estate market often involves people buying land and then building their own houses on it.
Government plans for growth
In recent years, the government has approved $1.3 billion for what it calls social housing projects. However, that amount has not been enough to meet the demand for affordable housing.
Vietnam’s fast economic growth has meant that cities are expanding with little or no planning. This is especially true in the two biggest cities -- the capital of Hanoi in the north and the business center of Ho Chi Minh City in the south. This could mean that many people living in those cities might not be able to afford to buy a home.
I’m Anne Ball.
Ha Nguyen wrote this story for VOA News. Anne Ball adapted it for VOA Learning English. Mario Ritter Jr. was the editor.
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Words in This Story
affordability – n. to be able to pay for something
real estate –n. property which includes land or buildings
luxury – n. a condition or situation of great comfort, ease, and wealth, often used before another noun
premium – adj. high or higher than normal
middle-end –adj. neither too high or too low
township – n. a unit of local government in the U.S.
efficient – adj. capable of producing desired results without wasting materials, time, or energy
transit – n. capable of producing desired results without wasting materials, time, or energy