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Tiếng ViệtAre current real estate developments in Vietnam quite similar to those in Hong Kong?
2015 Hong Kong government tightened the legal framework for the project:
- To prevent the loss of national assets due to tycoons acquiring public land
- Increase real estate transfer tax to limit real estate speculation.
- Restrictions on licensing for apartment construction due to fear of affecting traffic density and traffic congestion.
- But the most basic thing is to tax the second house, which Hong Kong does not do like the US or Europe.
- As a result, house prices not only did not decrease but also increased rapidly.
The reason is
1/ Because businesses do not have public land, real estate businesses have to buy private land at extremely high prices to develop projects.
As a result, businesses have two options:
- If you can buy it in the center of Hong Kong, you can only build the high-end segment. It even bought old projects in the center to develop the high-end segment.
- Move to the suburbs to develop mid-range real estate and push prices in the suburbs to sky-high levels.
- This causes businesses working in industries that do not bring much profit to move to the suburbs because they cannot hire high-end segments, causing Hong Kong to mechanically expand the population very strongly in 2016, going to the suburbs to work. Making house prices not only high in the center but also high throughout Hong Kong.
- Hong Kong’s low-cost houses, which used to be built in the suburbs, have completely disappeared to make way for the mid-range segment.
2/ What if real estate transfer tax increases? People still need a place to live. They still find every way to own a house regardless of paying additional taxes to the government (the actual real estate tax must be borne by the buyer because it is added to the selling price).
And after several transfers, taxes made Hong Kong real estate prices even higher. What about higher? People who can’t afford to buy have to rent. More people wanting to rent to stay pushes up the rental price of townhouses and apartments, indirectly pushing up house prices (because the profit margin is too good and not affected by inflation or deposit interest rates). negative real estate, income is not enough to compensate for inflation, so they buy houses to rent to make sure).
This first affects apartments because apartments are the first choice of poor people, people with low and average incomes, and real housing needs. Push up apartment rental prices first, then push up apartment buying and selling prices. In the end, it turned around and pushed up surrounding real estate prices.
Wrong policy decisions (inadvertent) or intentional have pushed Hong Kong’s welfare into an alarming level.
To solve the problem of security. The Hong Kong government must approve the construction of 10m2 apartments to meet the needs of people who only have enough money to buy this type of apartment. The concept of matchbox apartments in the world comes from here.
And Price of 1 box of matches 10m2 in Hong Kong Good locations currently range from 200.000 USD or more and the rental price of “Hong Kong Matchbox” has extremely good profits.
3/The next matchbox project has a higher price than the previous matchbox because there is no more land to build matchbox projects. If there were any, it would be subject to population density issues.
How is Ho Chi Minh City now similar to Hong Kong? That’s why HOREA calls for building 25m2 apartments. In District 9 “where new apartment projects have flourished recently” there are tiny apartments less than 50 square meters. Or Studio apartments with an area of only 2m20 are also very hot.
Many comparison experts say newly opened apartments are selling at outrageous prices. However, if 10 investors open a new project for sale and all 10 are “overpriced”, it will be a very different story. That means the selling price is automatically set from top to bottom.
Some experts say the price of existing apartments is still cheap. This is correct. Because real estate is not like stocks. It has a longer delay. If new projects are too expensive, people will look for old projects to buy them.
After absorbing resale apartments from secondary investors of old projects, the general price will immediately increase and this is a common situation in many areas of the market. In stocks, it’s called breaking the barrier.
Specifically: If the entire 2020-2021 apartment prices are “overpriced” and 2 years of overpriced apartments will cause disruption. And the consequences are extremely serious. Millions of people will forever be without a roof.
