Social housing prices double amid growing scarcity

High demand for residential purposes, but the city is facing a shortage of housing supply, and it had driven the prices of apartments in Hanoi to double the levels five to seven years ago when they were first sold.

Ha applied to purchase an apartment at the Rice City Linh Dam project in 2014, and at that time, the price was around VND15 million (US$638.42) per square meter. The 63-square-meter apartment in a prime location costs less than VND1 billion. In 2015, she stepped into it, and after 5 years, she became eligible to sell it, with a VND1.5 billion for a 60% profit.

Prices for an apartment are rising skyrocketing

Since then, the apartments in Hanoi have kept jumping and currently stand at VND32-35 million per square meter, 130% up from the original prices. The prices at Rice City Linh Dam have almost caught up with those of apartments at nearby commercial projects such as CT3 HUD3 and Rainbow Linh Dam.

CT3 HUD3 prices have risen by 35-50% in the last 10 years, while at Rainbow Linh Dam, they have increased by 60%.

Prices at other social housing projects have also risen relentlessly in recent years.

Dang Xa in Gia Lam District, the city's first social housing project, was sold in 2013 at VND9 million per square meter.

Now apartments there cost at least VND18 million per square meter.

Prices at the Ecohome 1 project in Bac Tu Liem District currently stand at VND25 million, up from just over VND10 million in 2013 when they were sold. They were handed over to buyers two years later.

The smallest apartment here, measuring 36 sq.m, now costs some VND1.1 billion or VND30.5 million per square meter, and the largest, measuring over 65 sq.m, goes for 1.8 billion.

In 2015 and 2019, the developer of Ecohome 1 built two other social housing projects in the same area and sold them at VND13 million and VND16.5 million.

Many apartments in the market now command prices over VND30 million per square meter, equivalent to those of commercial apartments located three kilometers away. Even social housing projects that previously had poor sales are now seeing their prices increase. For example, the Bamboo Garden project in Quoc Oai District, which sold less than half of its apartments in 2017 at an average price of VND10 million per square meter, now has costs exceeding VND19 million, almost double the original price.

Recently, social housing prices on the primary market have risen, with a project in Nam Tu Liem District setting a record high price of VND19.5 million per square meter. Despite the high cost, the developer received ten times the number of applications for buying and renting apartments compared to the number available. 

The increased demand is due to the country's forecasted need for 2.4 million social housing units by 2030 and 1.2 million workers in industrial parks who do not have housing. Currently, there are only 155,800 units available for workers and social housing.

According to Tran Duy Do, a social housing development company manager, the scarcity of mid-range commercial apartments priced at VND25-30 million per square meter makes social housing a vital solution to bridge the gap. In Hanoi, only 12,600 new apartments were built last year, the lowest number in the previous eight years, and over 80% of them were in the mid-priced segment, with an average price of VND47 million in the primary market.

Last year, low-income housing comprised only 5% of the country's housing supply, with just nine social housing projects comprising 5,500 apartments being developed. Only 2,800 of them were for sale and were quickly sold out. To address this issue, the government approved a plan in early April to build one million social housing units by 2030, including 428,000 units by 2025, to keep housing prices affordable for low- and middle-income people in urban areas and workers in industrial hubs.

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