The Development of the Housing Sector in Vietnam

The development of housing is a crucial aspect of urban growth and social well-being, especially in rapidly urbanizing cities like Hanoi. The housing situation in Hanoi has evolved significantly over the past few decades, influenced by changes in policy, economic conditions, and urban planning. This essay explores the historical context, current state, and prospects of housing development in Hanoi, highlighting the role of government policies, private sector involvement, and the impact on residents.

Before the economic reforms of 1986, known as the “Doi Moi” policy, Hanoi’s housing sector was dominated by the public sector. The government played a central role in the construction and allocation of housing, with a focus on providing subsidized housing to state employees. The housing policy was heavily subsidized, and the government distributed housing in kind, including infrastructure systems and public facilities. However, due to financial constraints and the heavily subsidized nature of the policy, the government’s supply of housing could not meet the growing demand. In Hanoi, a large number of residents did not have adequate housing, and the average dwelling area per person was only 5 square meters.

The introduction of the Doi Moi policy in 1986 marked a significant shift in Vietnam’s economic and housing policies. The government began to encourage private sector participation in housing production, leading to a boom in housing construction. This policy change resulted in the rapid development of new housing areas, with much of the construction carried out by individuals and private companies. The government also introduced a series of directives to encourage large-scale housing investment by major developers, such as exemption of land premium and tax breaks. This led to the construction of large-scale high-rise housing areas in the late 1990s and especially since the turn of the century.

Today, Hanoi is experiencing a surge in housing development, driven by both public and private sector initiatives. The city is witnessing a major wave of affordable housing as the Hanoi People’s Committee approves a series of new social housing projects for the 2021-2025 period. Among the 72 newly approved projects, eight are social housing developments covering a total floor area of 255,700 square meters, equivalent to 1,580 apartments. Notable developments include the social housing project at Alley 218 Linh Nam in Hoang Mai District, with a total investment of $33 million, expected to deliver 500 apartments. Additionally, Hanoi has adjusted the planning of seven previously approved social housing projects, including the Tay Nam Kim Giang 1 urban area in Hoang Mai District, which is set to be implemented by 2027.

The private sector has played a significant role in the development of housing in Hanoi. Between 1985 and 1997, about 70% of new accommodation was constructed using financial capital from household and private sources. The government’s policies to encourage private investment have resulted in the construction of large-scale high-rise housing areas, contributing to the increase in average living areas. For example, between 1998 and 2005, more than 4 million square meters of housing were constructed in Hanoi, of which 60% was built by private companies. The private sector’s involvement has not only increased the supply of housing but also improved the quality and variety of housing options available to residents.

The development of housing in Hanoi has had a significant impact on the lives of residents. While the increase in housing supply has improved living conditions for many, it has also led to rising housing and land prices, making it difficult for some residents to afford adequate housing. The average living area per person has increased from 4 square meters in 1993 to 10.5 square meters by 1999. However, the rapid growth of the housing market has also resulted in inequalities, with some residents benefiting more than others. The government’s efforts to provide affordable housing through social housing projects aim to address these inequalities and ensure that all residents have access to adequate housing.

The future of housing development in Hanoi looks promising, with continued government support and private sector involvement. The Hanoi People’s Committee is accelerating the approval process for five large-scale social housing projects across Dong Anh, Gia Lam, and Me Linh districts, covering a total area of over 200 hectares, with an estimated 12,000 apartments in the pipeline. The government is also intensifying efforts to fast-track construction and ensure that these projects meet deadlines. Additionally, the introduction of new housing laws and policies, such as the Housing Law of 2023, is expected to further drive social equity and improve access to housing for all residents.

The development of housing in Hanoi has come a long way since the pre-Doi Moi era. The shift from a heavily subsidized public sector to a more market-oriented approach has led to significant improvements in housing supply and quality. However, challenges remain, including rising housing costs and inequalities. The government’s ongoing efforts to provide affordable housing through social housing projects and policy reforms offer hope for a more equitable and sustainable housing future in Hanoi.