The supply of casual housing is expected to increase again.

The supply of affordable and reasonably priced housing, which had disappeared for a while, is expected to increase again as legal issues are resolved.

In the National Housing Development Strategy 2021-2030, with a vision to 2045, the government aims to increase housing projects for people with low and middle incomes. However, in reality, the segment of affordable housing (priced under 25 million VND per m2) and reasonably priced housing (around under 40 million VND per m2) has gradually disappeared from the market.

A report from the Ministry of Construction states that in the fourth quarter of 2023, Hanoi and Ho Chi Minh City no longer have any casual housing projects eligible for transactions. According to the Ho Chi Minh City Department of Construction, in 2023, the city had 19 commercial housing projects for sale but no products in the casual segment. The City Real Estate Association (HoREA) also reported that this segment has completely disappeared from the market for the past three years. Not only casual housing, but projects with reasonable prices are also gradually disappearing from the market.

“It is too difficult to develop a project with a price under 35 million VND per m2, especially in Ho Chi Minh City if there is no support mechanism,” said Vo Hong Thang, Director of Consulting & Project Development Services at DKRA Group.

However, the story of making affordable and reasonably priced houses is expected to change from 2024.

The trio of Land Law, Housing Law, and Real Estate Business Law just passed, according to experts, will help remove legal bottlenecks, simplify land procedures, create opportunities to access land fairly and transparently, contribute to increasing the land fund for the development of casual housing, and bring this segment back to the market.

At a recent forum, Mr. Hoang Hai, Director of the Department of Housing Management and Real Estate Market (Ministry of Construction), affirmed that the changes related to the Housing Law, Real Estate Business Law 2023 will be one of the important legal frameworks with many regulations positively impacting the market, investors, and customers, supporting well for the strategy of developing social housing, cheap houses in Vietnam.

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, believes that when the legal corridor is clear, bottlenecks are removed and loan interest rates are adjusted more, there will be more positive information about the deployment of new cheap housing, social housing projects. Another expectation is that when policies supporting the segment of reasonably priced housing penetrate deeper, the supply is likely to be more abundant.

“When the supply increases, the supply-demand balance is naturally balanced, asset owners will have to reduce expected profits, and focus on products that meet actual needs. Accordingly, businesses also aim more at this type,” Mr. Chau shared.

Mr. Vo Hong Thang predicts that from 2024, the market will enter a new cycle, taking real estate serving actual living needs as the focus. In the short term, the segment of affordable and reasonably priced housing has more advantages than other segments when many investors choose to develop this type to improve liquidity. In the long term, the structure of product development will be related to available resources and the orientation of real estate developers.

However, according to him, to direct the market towards casual housing, more practical support and encouragement policies from the government are needed to solve the profit problem for this segment.

Mr. Nguyen Chi Thanh said that in the long term, to pull businesses towards developing commercial housing at reasonable prices, the first thing is to need to identify this type. In addition to clearing legal issues, there should also be a mechanism, specific preferential policies to encourage investors to participate such as: prioritizing low-priced housing projects at locations with convenient traffic connections, not too far from the city center. There are tax support policies, effectively enforcing regulations on taxing the second, third house of each individual to reduce speculative pressure…

In addition, to address the “phase difference” phenomenon in the supply of high-end and affordable housing, experts believe that real estate taxation is an effective solution. Recently, Ho Chi Minh City has proposed allowing a pilot tax on real estate that the owner does not directly use, or another plan is to increase the registration fee, land use tax, and personal income tax of the group of entities owning multiple houses and land.

• Referred to: VnExpress