Population shift towards cities must be met by greater provision of housing, World Bank report notes.
The World Bank’s “Vietnam’s Affordable Housing - A Way Forward” report shows that the structural shift away from rural areas and towards a higher-productivity manufacturing and service-based economy will drive population growth and new demand for housing in cities.
The proportion of the urban population is expected to reach 50 per cent by 2040, with an estimated 374,000 additional housing units needed every year in cities to cope with demand.
“Urbanization has been used as a tool to accelerate economic growth and poverty reduction in many countries around the world, and affordable housing will be instrumental in helping Vietnam achieve its goals of increasing productivity and inclusive urban growth,” according to the report.
Despite economic growth, the report stated, Vietnam still has a substantial deficit of quality housing. Almost 20 per cent, or approximately 4.8 million households, are still living in poor conditions.
Meanwhile, the majority of new demand for housing will be concentrated in only a few major cities and industrial zones.
Together, the Red River Delta Region, surrounding Hanoi, and the South East Region, around Ho Chi Minh City, will account for around two-thirds of the new housing demand.
Vietnam has undergone several stages of housing policy in the past. Following the liberalization of the sector the growth in real estate spurred by foreign direct investment and speculation led to significant home price increases and supply in the luxury market that eventually resulted in a real estate bubble from 2009-2012.
The VND30 trillion ($1.3 billion) housing credit support package, launched in 2012, has helped reorient developers and lenders towards the affordable middle-income market, where there are real home ownership needs.
The revised Law on Housing, passed by the government this year, provides a strong legal framework for reforms with a new focus on supporting self-built housing, an active role for the private sector in housing provision, and addresses the shortage of affordable rental housing, especially for workers in industrial zones and among students.
Towards that end, the report, which includes a comprehensive sector assessment and roadmap for affordable housing in Vietnam, recommends the following: increase and reorient government spending in the housing sector, develop a National Affordable Housing Program, prioritize structural reforms, and support market development.