Statistics of the municipal Department of Construction revealed that the city had nearly 480,000 households that does not own a home, 300,000 households that required social housing apartments on rent and 143,000 low-income households. However, the number as well as the quality of affordable housing projects fails the actual demand

Housing projects for workers and relocated residents in District 2 of HCM City

 

The affordable housing projects could be an opportunity due to a stagnant estate market. Investors have to focus on the middle-class housing segment as there is oversupply of high-end projects. But in the last 5 years, the Government’s affordable housing programme was able to accomplish just 37% of the target set for low and middle-income people living in urban areas and workers in Industrial Parks. Many investors have not been interested in this segment because of low profit and of a lack of workable measures. In addition, the expiry of attractive interest rates for affordable housing projects has led many firms to consider pulling out of the sector, despite the country’s growing population still in great need of the cheap home. Besides that, due to oversight by authorities and “profit – oriented objective” by the project investors, most affordable apartment buildings have committed various violations of construction regulations: construction density, land use coefficient, or population density – all have exceeded the allowed limit, leading to a decrease in quality of residents’ life.

 

Fail to meet high demand

Nguyen Van Danh, deputy director of the Department of Construction, said: “Now workers in industrial and processing zones need around 245,000 places to live, but the city has only 5,500 affordable houses and 39,500 guesthouses for them.” According to experts, the biggest hindrance for affordable housing development is the lack of attracting loans as well as capital to support people and businesses to construct and acquire affordable homes. The schedule of some projects has been postponed since there are no longer any stimulus packages for businesses or home buyers.

Moreover, director of the Housing and Real Estate Market Management Department Nguyễn Trọng Ninh said, the main obstacle is the lack of “clean” land. According to Decree 100, all commercial housing projects in urban areas must allocate at least 20% of their land for social housing. However, in recent years, the implementation of this land allocation has not been thorough, not meet the demand.

Especially, affordable and social housing projects for low and mid-income people are mostly in the capital city’s outlying areas which make it inconvenient to commute to central areas. Furthermore, poor quality and lack of public infrastructure such as roads, water supplies or schools are said to be too great inconveniences. It was said that the problem was a result of policymakers caring more about the number of home seekers when developing affordable-cost housing projects rather than considering their needs. Thus, these housing projects has not been attracted many buyers/ tenants, in spite of the shortage of lodging.

Are there any solutions?

Lê Hoàng Châu, chairman of the HoREA, said that in order to successfully implement an affordable housing project, the investor must meet several criteria. Firstly, a “clean” land area is needed, the building must have easy access to major traffic routes and be located not far from the city centre, guaranteed construction quality and add-on services like schools, shopping malls, and other public spaces. The HoREA recommends the Prime Minister and Ministry of Construction need to direct the localities to review urban planning to determine the specific location and land area for development of each type of dwelling houses. Secondly, “the price must be within the ‘affordable’ range of target customers,” with flexible payment options. However, he admitted all these criteria are difficult, given the high land prices at the moment. Finally, to have housing projects with good quality with reasonable prices or with low price, we need 3 main factors: effective support from the authorities and company’s determination, available land and finance.

 

Small-sized housing solution

Recently, the Ministry of Construction has given a nod to the construction of an apartment of 25 square metres to meet the high demand of affordable housing for middle-income people. Nguyen Van Duc, deputy director of Đất Lành said that it is feasible to build apartments priced at VNDD200-300 million with this size in outlying districts like 12, Hóc Môn, Củ Chi, Bình Chánh and Nhà Bè. However, Trần Trọng Tuấn, director of the Department of Construction rejected this idea and he said a better solution is at VND350million – 1billion because super cheap housing can’t deliver quality. In addition, these locations make it inconvenient to commute to central areas, and which lack necessary supporting facilities. Besides, The HCMC government has worried such small-sized condos will put pressure on the city’s infrastructure and causing to “slums in the sky” and affect urban planning. But according to Nguyễn Mạnh Hà, former director of the Housing and Real Estate Management Department, apartment area was not the main factor that decided living quality. He said design and surrounding infrastructure were of more importance.

According to project developers The biggest barrier to housing cost reduction in the city, is not the standard size of condos, but rather the land tax and other complicated procedures that cost developers both time and money.

In general, although the development of affordable housing is slow, with many positive solutions from the state management agencies, businesses, the investors and especially with the intellectual contributions of the consultants, the affordable housing problems will surely be resolved better. When the problem of land allocation and mentioned barriers to entry are solved, the supply of affordable housing will grow sharply in the near future. Therefore, the urgent need for housing for the vast majority of people, especially those with middle-income incomes, will be adequately met.