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Vietnam Business » Vietnam Real Estate Market News » Hanoi home prices out of reach

Hanoi home prices out of reach

With apartment and house prices becoming more and more expensive, the hope to own a home in Hanoi is just a far-away dream for many young people. Xuan Bach, a media executive at a well known company, has been searching to buy a home for the last several years, but he still cannot buy anything. Bach is now living in a rented room in Hoang Mai district and pays one million in rent.

With a monthly income of five million dong, after basic needs, Bach has only 1.5 million dong left. He needs at least one billion dong to purchase an apartment in Hanoi. Even for a low-cost apartment, he still needs 300-400 million dong. If he purchases a flat by installment, it will take him some ten years to pay his debts.

Real estate prices are more and more expensive, beyond the range of the average income. The prices of apartments in Trung Hoa Nhan Chinh residential quarter has climbed to 37 million dong per square metre. In order to own a flat at Thang Long International Village, one would have to pay some 30 million dong per square metre. The prices of apartments are softer, but they are still about 27 million dong. Those far from the city center also sell at 16-20 million dong.

Meanwhile, luxury apartment prices at The Manor, Ciputra and Golden Westlake are $2000 per square metre at the lowest. Young people working as employees may never dream of buying such an apartment in luxury areas.

Son Ha, a civil engineer, feels happier than Bach, because he has purchased a 75 square metre flat in Xa La urban area in Ha Dong district (previously belonging to Ha Tay province). Ha must pay 1.3 billion dong, but he still feels happy since everything is getting more and more expensive. Ha thinks that it would be better to borrow money to buy houses as soon as possible, or you will never be able to purchase a house with your own money.

According to the Hanoi Peoples Committee, the average income in 2009 was 32 million dong a year. Meanwhile, according to the Ministry of Construction, low-cost apartments are 300-400 million dong with an area of 50 square metres. This means that a low-cost apartment is higher by 10 times than the average income of Hanoians.

Nguyen Truong Tien, Deputy General Director of Hanoi Construction Corporation, noted that it is very difficult for young people to have flats of their own with current land and real estate prices escalating continuously.

Tien said that contractors do not want to develop low-cost apartment projects now, because of the low profits and the fact that low-cost apartments are not easily sold.

Tien said that the only solution to this problem is applying the most modern construction technology, which constructs low cost, high quality homes.

According to Tien, with modern technologies, construction costs will decline by 60 percent.

"Besides the technology solution, the city should also give preferences in land fund, while banks must give preferential loans to encourage construction firms to build low-cost products," he asserted.

Vietnam Business And Financial News Network. Source [english.vietnamnet.vn]

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