Hanoi (VNS/VNA) - The affordableapartment segment will be the star of the property market in the coming years,but its supply is increasingly scarce while the demand for this type ofapartment remains high, according to an analysis by property services firm CBREVietnam.

In the first half of 2018, the number ofaffordable apartments opened for sale in Hanoi and HCM City decreased by 20percent and 36 percent, respectively, over the same period last year. CBREforecast that the supply of affordable products will remain scarce until theend of this year.

In fact, most of the apartment projects that haveprices ranging from 1.5 to 2 billion VND (64,377 to 85,836 USD) per unit havegood transactions. At this stage, as the market for land near HCM City iscooling down, the money flow from investors is oriented towards middle-rangeapartments.

According to experts, the supply of projects whichhave apartments priced around 2 billion VND each is scarce while the actualdemand is quite large. Almost all of these projects quickly sell 80-100 percentof their units when the sale begins.

Meanwhile, according to forecasts of many realestate experts, from 2020 onwards, construction enterprises will find itdifficult to build affordable housing as the cost of construction per 1 sq.m islikely to increase, up to 24 million VND per sq.m. Thus, a 45 sq.m apartmentwill cost about 1 billion VND.

Su Ngoc Khuong, investment director of SavillsVietnam, said it is very difficult to build apartments priced from 1-2 billionVND from now through the next five to seven years. Affordable apartment priceshave been rising steadily for the last six years. Since 2012, the price ofaffordable apartments was 13 million VND per sq.m; after five years, the pricehas increased by over 50 percent to 18-20 million VND per sq.m and in the firstmonths of 2018, affordable apartments’ prices are 24-26 million VND per sq.m.

In addition to the increasing prices of land andconstruction costs, housing prices also reflect some other factors such asinterest rates, labour costs, marketing and profits of enterprises; therefore,experts forecast it will be difficult to keep housing prices low.

In the first six months of this year, land pricesin HCM City increased by 10-15 percent. In some areas, land prices escalated by40-50 percent within a year. This poses a dilemma for anyone looking to purchasean affordable home.

Le Hoang Chau, chairman of the HCM City RealEstate Association, said that in order to build affordable housing, the landprice must be reasonable, but high demand for land is keeping prices high.

Firms say it is difficult to start a new projectat an affordable cost, due to a variety of costs for implementing the project,plus the payment for land compensation at market prices when clearing ground.

Moreover, the authorities’ approval process istime-consuming. Securing approval and beginning sale of products take at leastthree to five years. The longer the time, the higher the cost of the projects —an increase which customers have to bear in the form of higher housing prices.-VNS/VNA