Hanoi (VNS/VNA) - The real estate market issuffering a severe shortage of affordable homes despite the segment witnessinghuge demand, attendees heard at a recent conference.

Expert Dang Hung Vo said at the conference held by Dan Vietnewspaper that the structure of property products in Vietnam did not matchmarket demand, especially in Hanoi and HCM City.

Vo pointed out that the supply of high-end apartments wasabundant while there was a shortage of affordable homes.

The Central Institute for Economic Management (CIEM) citedstatistics showing that as Vietnam was undergoing rapid urbanisation, onaverage around 1 million people migrated from rural areas to big cities like Hanoiand HCM City each year and the figure is expected to rise further.

This increases demand for affordable homes in big cities. Itwas estimated that demand for affordable homes accounted for around 60-70 percentof total market demand, but the supply met less that 20 percent. Specifically,apartments of less than 60sq.m with prices of less than 700 million VND (30,500USD) accounted for just around five per cent of market supply.

Vo said that the Government’s policies for developing socialhousing projects and affordable homes had failed to raise resources from theprivate sector.

Many projects had ground to a halt after the 30 trillion VND packageof preferential loans for social housing development ended, proving that socialhousing development was still too reliant on Government support.

Vo said that it was important to develop policies to promotethe development of affordable homes, rather than social housing development.

CIEM Deputy Director Tran Kim Chung agreed, saying that focusshould be placed on developing affordable homes.

He pointed out current regulations had not allowed for thedevelopment of small apartments, which was hindering the development ofaffordable homes. This issue was made worse by difficulties in accessingcredit, complicated procedures and a lack of land available for construction.

Chung said that Vietnam needs to have appropriate policies inland, tax, interest rates, credit and mortgages for affordable home developmenttogether with allowing the development of apartments of different sizes to meetdemand.

He stressed that developing affordable homes is a pressingissue for Vietnam as rapid urbanisation are putting pressure on city infrastructure,such as power grids, water networks and schools.

According to Nguyen Van Dinh, General Secretary of the VietnamAssociation of Real Estate Brokers, due to a lack of infrastructure, such astransport, schools and retail outlets, many affordable housing projects werenot attractive to buyers.

Dinh said that the development of affordable housing projectsmust be synchronised with the development of urban infrastructure to encouragepeople to buy and live in areas which were far from the city centre. “Affordabledoes not mean poor quality.”

Policies for developers and low-income earners to buyaffordable homes should also be devised, together with the development of landavailable for building affordable housing projects.

In addition, it was necessary to develop affordable homes forlease, Dinh said.

Vu Van Phan, Deputy Director of the Ministry ofConstruction’s Department of Housing and Real Estate Management, said thatdevelopers were still not interested in developing affordable homes and theyexpected to be provided with more incentives. However, the Government could notprovide too much financial support for developers of affordable housingprojects, given the limited budget, he said.

The ministry’s statistics showed that by 2020, around 1.7million people were in need of homes in urban areas together with 1.7 millionworkers demanding stable accommodation, requiring the development of nearly 1million apartments.-VNS/VNA