Private vs state housing: a review from Hanoi

Commentary / Sep - Oct 2018

Private vs state housing: a review from Hanoi

by Dr Quang Minh Nguyen

September 10, 2018

With over 7.3 million permanent inhabitants (as of May 2018), of which almost 4 million live in urban areas, Hanoi is second only to Ho Chi Minh City as the largest and most dynamic housing market in Vietnam. The 12 central districts are home to 3.7 million people (Statistical Office, 2018). This is where the housing demand is as high as the population density, and continues to rise while the supply capacity, despite recent improvement, still has a long way to go to meet this demand. After the politico-economic reform began (in 1986) and especially since 2008 (when the capital city was enlarged), the housing market in Hanoi has become more dynamic, because new private-sector housing providers have been allowed and encouraged to participate in housing investment and development.

However, for various reasons, they took only a slice of the pie, estimated at 10 per cent of the formal sector and 3 per cent of the entire housing market (Ahmed and Sager, 2010). Today, after 10 years, it is necessary to review the current housing provision and to consider how to successfully deal with both housing quality and quantity at the same time.

There are 12 housing types in Hanoi: traditional rural house; traditional urban house; colonial villa; colonial shophouse; five-storey collective block; self-built family house; self-built villa; social rental house; mini apartment building; standard row house; standard villa; and standard high-rise apartment building. The slum is not addressed in this article as the 13th housing type because it has never been officially regarded as housing and the city authority is trying to liquidate and replace it with decent social housing in the near future.

Another major change in Hanoi’s housing market today is the increasingly significant role of private housing providers, apart from state housing corporations that used to dominate housing construction and delivery. Foreign partners, mostly from ASEAN countries, are invited to take part in the housing market, but they mainly aim at high-end customers with several deluxe housing projects. In spite of having grown quickly in recent years, this segment only makes up a small part of the total housing market. The majority is targeted at the city’s middle-class and low-income groups.

Annually, Hanoi’s official housing supply capacity is estimated at 70,000 units, most of which are apartments (Pham, 2017). This supply can meet only 20 per cent of the real demand (Tran, 2018). Meanwhile, self- built housing has high potential, because it made up about 70 per cent of the total urban housing stock in Hanoi as of 2009, compared to 60 per cent nationally (UN Habitat Vietnam, 2014), but still somehow regarded as a non-standard housing sector. Such small-scale family houses are usually designed by freelance architects or by registered architects in private design companies (both officially on contract and individually undertaken as an extra job after working hours) and built by local constructors hired by house owners. In fact, it is difficult to manage this kind of housing development.


Housing quality and price are probably the greatest concerns for millions of residents and hundreds of thousands of migrants, as many of them are living in poor quality dwellings caused by overpopulation; pollution; overzealous businesses; uncontrollable building activities; ineffective maintenance policies for housing in general; and inadequate conservation programmes applicable to heritage houses in particular.

Housing quality must take into account infrastructure conditions and social facilities as well as public services within the city and the neighbourhood, such as road systems; power and water supply; drainage; waste collection; landscape; health care; parking; schooling; shopping; and sports training. In most cases, these factors are ignored or not properly considered.

Housing price often exceeds the spending power of the majority of city residents, as a consequence of either speculation or the so-called ‘fee-over-fee’ situation in housing construction and provision, even in the social housing sector where housing prices should be carefully calculated in view of the affordability for low-income people. When no reasonable housing pricing is fixed, the project will sooner or later fail to a certain extent.

To many people, the most important consideration will either be: “better housing quality at the same price” (for high-income group) or “the same quality at a more reasonable price” (for low-income group). Today, this question has led people to take a much longer time now than in the past to look for appropriate accommodation and to choose one from a number of options available. This question also makes housing providers, especially state-owned ones, to rethink their services.

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