It is now considered the worst time for the housing market as the prices have been falling down dramatically. However, if reviewing the market over the last 20 years, one can see that the land and houses have become 100 times more expensive.
Housing price 25 times higher than people’s average income
According to Dr Dang Hung Vo, former Deputy Minister of Natural Resources and the Environment, a well known real estate expert in Vietnam. The current average housing price is 25 times higher than the annual income of workers, is five times higher than that in developed countries and 10 times higher than developing countries.
Supposed that laborers can save 30 percent of their income for housing every year, and then they would only be able to buy houses after 75 years of working. As such, laborers would be able to buy houses for themselves at the end of their lives.
“The real estate price in Vietnam is on the highest peak of the world, while the average income of Vietnamese laborers is the lowest in the world,” Vo commented.
A survey on the housing situation conducted in 2009 by the Ministry of Construction showed that in urban areas, 4750 households did not have accommodations, while the figure was 7897 households in rural areas.
Meanwhile, a survey on households and housing of the General Statistics Office (GSO), there are still 1.6 million temporary accommodations, 0.5 million apartments with the area of less than 15 square meter in urban areas, 1.5 million rudimentary houses in rural areas.
Also according to the Ministry of Construction, the total number of low income earners in urban areas is 5.8 million people nationwide who need up to 70 million square meters of housing. It is expected that the figures would be 6.5 million people and 117 million square meters by 2020.
The price paradox will not exist
The national strategy on housing development by 2020 with the vision until 2030 is believed to light up the opportunities of the poor to have accommodations.
The strategy has affirmed that the State would apply the necessary policies to develop the housing market, while it would give support to special subjects, including low income earners.
Vo has commented that the strategy has been built up on two legs – the healthy market for those, who can afford houses, and the state’s support to low income earners.
In the next five years, Vietnam strives to have 10 million square meters of housing, including the housing for low income earners in urban areas, help 400,000 poor households in rural areas improve their accommodation conditions, reduce the percentage of rudimentary houses to less than five percent. Meanwhile, the proportion of housing for lease would reach 20 percent of the total housing fund to serve low income earners.
In the next five more years, Vietnam strives to have 12.5 million square meters of housing in urban areas and help 500,000 households in rural areas improve their accommodation situation, eliminate rudimentary houses across the country.
The key to the housing development is the investment mechanism. The State would make investment itself and encourage the investment of the community.
The housing development strategy for the next 10 years puts the focus on the development of low income earners and poor laborers. “Once the problem is settled well in Vietnam, this means that we can eliminate the housing price paradox, i.e. narrowing the gap between the average price and the annual income of workers,” Vo said.