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Vietnam is expecting a drop in the number of new homes built over the next five years as a sharp decline in the supply of housing in the country will lead to an even smaller increase in the rental rate.
The government is set to announce an end to the long-term rental subsidy for investors and instead will offer incentives to new home buyers who can meet a certain down payment in less than a year.
Vietnam’s real estate sector will see its first significant decline in new home construction since 2006, as the country struggles to contain its growing supply of new dwellings.
According to the government’s latest National Housing Survey, the country’s average monthly rent is expected to rise by around 0.6 per cent this year to reach about Rp1,500 ($1,000) a month for a single person.
The survey also revealed that the average monthly mortgage payment for new home owners will rise to Rp9,200 ($1.3) in 2019, from Rp3,600 last year.
«It is expected that in 2019 the market will see a small increase in rental demand for the first time since 2006,» said Nguyen Phuong Nguyen, a real estate broker at the Baidu Real Estate Platform.
The latest survey also showed that the country was expected to build a total of 4.2 million new dwellings over the course of the next two years, up from 3.9 million last year, although the number has yet to be announced.
Virtually all of the new dwellings being built in Vietnam are being built on farmland.
The Government has also proposed allowing more foreign investors to buy Vietnamese properties in the coming years, which is expected, with the country set to record a record number of foreign investment transactions last year for the third consecutive year.
While there are still a large number of properties for sale in Vietnam, the number will be dwarfed by the demand for rental housing and the country has been pushing to increase the number and the quality of the rental housing available.
The country’s rental housing shortage is mainly due to the low supply of rental housing.
According the real estate portal Huay, rental housing has been available in only 3.3 per cent of the country for five years, down from more than 10 per cent before the financial crisis hit in 2008.
The current shortage of rental homes, the biggest issue facing the country, has left many families feeling stuck.
«My husband and I have been living in a rented flat in Hanoi for more than five years,» said one woman, who asked not to be named.
«We have been renting a house since last year,» she said.
«There is no vacancy.
I just hope to get the house to rent again.»
The rental market has also been affected by a high number of suicides in the Vietnamese capital, Hano.
Last week, two people took their own lives as a result of their frustration with their rental accommodation.
On Tuesday, a suicide was reported in the city of Dong Nai.
«This is the third time this year I have had to leave my house to get away from my husband because of this crisis,» the woman said.
The Vietnamese government is currently discussing a bill to allow foreign investors and other foreign nationals to buy up to 50 per cent (50 per cent is a 50 per a 1,000 rental units) of rental properties.