Within her 49sq m apartment unit in Ho Chi Minh City, Dang Tuyet Huong sleeps with her young daughter in a room just wide enough to fit a queen-size mattress.

Her husband and their son make use of the mezzanine, where the ceiling is too low for them to stand upright. Her sister and brother-in-law make do with another windowless space beneath.

Huong bought the 26-year-old apartment for 1.45 billion dong in 2021. But she counts herself lucky because she owns an apartment in a city facing a severe shortage of affordable homes.

From October to December 2022, the average selling price of apartments hit 125 million dong per square metre. Nearly half of the new villas or townhouses in Ho Chi Minh City in 2022 cost more than 30 billion dong .

But the eye-popping prices belie the deep freeze that has taken hold of the property market. Liquidity-starved developers are dangling discounts of up to 40%, while interest rates of up to 14% keep genuine buyers away.

Meanwhile, delays in approvals for land development are squeezing the pipeline for new affordable homes. Observers attribute the logjam to policy paralysis among bureaucrats afraid of being swept up in Communist Party chief Nguyen Phu Trong’s years-long campaign against corruption.

Grey areas in Vietnam’s property laws make the real estate sector ripe for fraud, and officials are wary of being snared in long investigations.“Local governments are very, very reluctant to make a decision or issue new approvals for certain projects,” said Tran Xuan Ngoc, group chief executive of listed developer Nam Long Investment Corporation.

 - ANN