The study focuses on two primary factors that are supposed to greatly affect the urban property price, that is, changes in calculation of land use fees and high capital cost for investment in housing development projects. After analyzing such influential factors, four suggestions are offered hopefully making the urban land price closer to the ability to pay and improving social welfare. | ECONOMIC DEVELOPMENT No. 208, December 2011 EFFECT OF POLICIES ON THE URBAN PROPERTY PRICE IN VIETNAM by Dr. NGUYEÃN NGOÏC VINH* The urban property price has a great impact on the purchase of a dwelling house by many people, but the urban property price in Vietnam is beyond the reach of many urbanites. Therefore, identifying precisely factors affecting the urban property price is a challenge for researchers and policy-makers. The study focuses on two primary factors that are supposed to greatly affect the urban property price, that is, changes in calculation of land use fees and high capital cost for investment in housing development projects. After analyzing such influential factors, four suggestions are offered hopefully making the urban land price closer to the ability to pay and improving social welfare. Keywords: urban property price, land use fee, capital cost 1. The problem Despite the fact that Vietnam’s real estate market is stagnant since 2008, the urban property price has still been beyond the reach of many low-income people, making it difficult for the government to improve social welfares. According to the actual data, per capita income in Vietnam has shown an onward trend, rising from US$722 in 2006 to US$1,024 in 2008 and US$1,200 in 2010. In 2010 alone, the per capita income reaches US$1,950 in Haø Noäi [7] and US$2,900 in HCMC [8]. Property prices for low-income people have also risen to VND8-10 million for a square meter of land and VND10-12 million for a square meter of floor in a tenement block [9]. Accordingly, a 50-square-meter flat or floor may cost at least VND500 million. Suppose that the property price and the income fluctuate on the same trend, and low-income persons save a third of their income, they can only pay off their ‘dream flat’ after 25 years. Once the property market becomes busy again, to own a * University of Economics - HCMC dwelling house may be never in the wildest dream of low-income people. Therefore, it is .
