As the price of real estate in Yangon keeps rising, the dream of homeownership is slowly slipping away for many of Myanmar’s middle-class. Many have been trapped in a cycle of perpetually paying rent, and saving money to buy a home has become more and more difficult.
“When I started renting my apartment, I paid K5,000 for one month’s rent. Now, the price has gone up to K80,000. Previously, I was able to save money every month to buy a home, but the price has been going up and up, and I can’t do it anymore,” Aye Myat Mon, a resident of Yuzana Garden City housing complex, told Myanmar Business Today.
Now, her family’s monthly income is K250,000, but food and other daily essentials have become more expensive, depleting her savings.
In Yangon, the house rental market has become too expensive too quickly for many people, increasing around 20 percent every year, said U Nay Min Thu, managing director of real estate agency iMyanmarhouse.
“The rental market has not seen any significant reductions for several years. Still the market is strong,” he said, adding that his agency sees over 4,000 offers to rental property every month.
According to the recent census, about 24.5 percent people in Yangon live in leased houses or apartments. In Yangon, the house rental system requires at least six months to one year of rent paid up front. When the lease is finished, the owner typically raises the rental fee.
Recently, the price has risen so sharply that some people cannot even afford to rent a house. Some families have started to share leased property.
“Now, with what is happening in Yangon, buying a home or even renting is more difficult. Everyone is watching the real estate market blow up, but I think the market will stabilise after 2015,” said U Myat Thu Win, a real estate agent from Shwe Min That real estate company.
A group of real estate companies has come out against the government, complaining that Yangon’s population is going up year by year due to migration from rural areas, and that the government should build more affordable housing for these migrants.
“When the government constructs affordable housing, it is very far from downtown. So the location is inconvenient for people, and the price can be as much as K10 million, which is not affordable for many in the lower-class. Middle-class people can probably somehow afford one of these houses,” said Ma Shwe Yi, a resident of Tamwe township.
For affordable housing, a buyer needs to pay K3 million in the first phase of payment, K5 million in the second phase and K2 million in the third phase, which is unattainable for many. However, under a monthly instalment system, more is expected be able to buy apartments.
The government has developed a lot of affordable housing units, but there is no proper system to sell them. Agents inflate the price of these units, according to one civil servant from South Dagon.
The government has recently approved the construction of the Yangon New City project, which will include massive housing projects. Yangon has over 7 million people, and will need over 10,000 new apartment units per year, but the government has only been able to build 7,000 per year, according to Yangon City Development Committee.
Source: Myanmar Business Today