Hanoi’s population figure of seven million is a close second behind HCMC’s eight million, but Hanoi can only handle three million people comfortably while construction of new houses to fill that gap is lagging. The shortage is posing a challenge for housing development managers.
Nguyen Tran Nam, deputy construction minister, touched on the issue at a property conference themed ‘Hanoi property market development: opportunities and challenges’ held in Hanoi last week, saying that Hanoi had a strong housing demand because of the shortage. Compared to HCMC, current accommodation supply in Hanoi accounts for one-third.
Nam said there is some 1.6 billion square meters of housing space nationwide, in which half the total number of families lived in 60-square-meter apartments, the rest in small houses with under 15 square meters per person. Two and a half percent of the country’s population live in housing with under five square meters per person. That large imbalance has contributed to the housing demand.
The deputy minister noted that the property market in HCMC was always moving because of the high volume of private condo projects combined with a lot of investor activity. The abundant housing supply has kept the HCMC market stable with property selling prices lower than Hanoi, which witnessed a feverish period in the first quarter of this year, partly because of limited supply.
Compared with 2009’s last quarter, this year’s property prices in Hanoi reached sky-high with land and housing prices up by 15% to 20%. At some locations, prices increased 30- 40% compared to the last quarter of last year. Although the land fever has cooled and the market quieted, property prices in the city are still beyond reach of many city dwellers that need accommodation.
“Although property developers offered a reasonable price, investors bought and resold for profit, making property prices in Hanoi rise,” Nam said adding demand outstripped supply.
Vu Xuan Thien, deputy head of the housing and property management department, also said this year’s high prices were the result of speculation and false rumors spread by property speculators.
Thien said there was an increasing number of average income earners who couldn’t afford houses at these prices.
Recent decisions to allow the resumption of construction on 800 delayed property projects in Hanoi should address part of the supply problem.
Expanding business north
Seeing potential in the demand, some property developers in the south have planned moving north to expand.
Among the companies, Dat Xinh Real Estate Services and Construction Corporation set up a member company in the capital city. Sacomreal and Vineland are pressing ahead with plans to move north for business. According to property experts, this trend will offer more stocks and more chances to homebuyers in the capital city.
Nam highlighted the strong points of southern developers, saying they are very active in selecting a property segment for investment. Moreover, southern developers often expand their investments to neighboring provinces.
Nguyen Van Minh, general secretary of Vietnam Property Association, said in general southern developers are more professional than their colleagues in the north. When the property market in the south shows signs of saturation, the north beckons.
Tran Thu Hoai, deputy general director of Hoa Do Corporation, which has tens of property projects in Hanoi, said a lack of capital was the main thing that has slowed down the developers. Other reasons were new credit policies that slowed homebuyers and developers.
Nam said the outstanding loans for property in Hanoi accounted for 16% of property loans nationally while HCMC accounted for 50% of the total.
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