Social housing in Ho Chi Minh City: Supply is limited, price exceeds 700 million

The supply of social housing in Ho Chi Minh City and the southern provinces is seriously lacking compared to the target, while high selling prices make it difficult for workers to access.

The social housing market in the Southern region is facing a serious shortage of supply, in the context of rapidly increasing prices, posing a major challenge to the housing security goal of low-income workers.

Southern localities aim to build tens of thousands of social housing units in the 2021-2025 period, but progress is still very low.

Goals and reality are far apart

According to the 2021-2025 plan, Ho Chi Minh City aims to develop 35,000 social housing units. However, according to a report from the city's Department of Construction, the completion rate is still below 25% of the target. A similar situation is also occurring in neighboring industrial provinces such as Dong Nai and Tay Ninh, where many projects are behind schedule despite huge demand.

The gap between planning and implementation has created a huge gap in the market, making it difficult for hundreds of thousands of workers and laborers to have the opportunity to own stable housing.

High selling prices, beyond affordability

Although being low-cost housing products, many social housing projects in Ho Chi Minh City currently have an estimated price of 12-15 million VND/m². For a 50 m² apartment, the total cost after adding taxes and other fees can exceed 700 million VND. This is a significant number compared to the average income of workers of 8-10 million VND/month.

Meanwhile, the price of primary commercial apartments in Ho Chi Minh City has reached 60-70 million VND/m². The escalation of construction material prices, labor costs and land prices is gradually narrowing the gap between social housing and commercial housing.

Major market barriers

The shortage of social housing supply comes from many core causes:

• Lack of clean land: In big cities, land for social housing development is very limited, many projects have to move far from the center, causing inconvenience to workers.
• Complicated legal procedures: Project approval, site clearance compensation and land use conversion processes are lengthy, slowing down the progress of many projects.
• Low Profitability: With the profit ceiling limited to 10%, many businesses are not interested in investing in this segment due to high risks and large investment capital.
• Unsynchronized support policies: Although the Government 's VND120,000 billion credit package has been announced, the disbursement speed is still slow due to strict conditions for accessing capital.

Efforts from the government to remove

Faced with the above situation, the Ho Chi Minh City People's Committee has chaired many meetings to resolve difficulties for the projects. The city has resolved problems for 48 projects and is promoting the allocation of 20% of land fund in commercial housing projects to develop social housing, expected to provide about 115,800 apartments.

Vice Chairman of the Ho Chi Minh City People's Committee Bui Xuan Cuong affirmed that the city will minimize administrative procedures, create favorable conditions for businesses and commit to completing the target of 13,040 apartments in the 2025-2030 period.

The Ho Chi Minh City People's Committee has just approved IDICO Petroleum Construction Investment Joint Stock Company (IDICO-CONAC) to be the investor of the My Xuan B1 social housing project in Phu My ward (formerly My Xuan ward, Phu My city, Ba Ria - Vung Tau province).

Resolving legal, capital and land fund bottlenecks is considered a key factor to realize social security goals and ensure sustainable development for the Southern key economic region.

Source: https://baolamdong.vn/nha-o-xa-hoi-tphcm-nguon-cung-nho-giot-gia-vuot-700-trieu-400344.html