CURRENT SITUATION AND SOME SOLUTIONS FOR SOCIAL HOUSING DEVELOPMENT IN HANOI
CURRENT SITUATION AND SOME SOLUTIONS FOR SOCIAL HOUSING DEVELOPMENT IN HANOI
Nguyễn Lê Diệu Linh
Vũ Thị Thúy Hảo
Hanoi University of Natural Resources and Environment
Abstract:
This study aims to assess the current situation of social housing for low-income individuals and propose solutions for social housing development in Hanoi. By analyzing secondary data from government reports and organizations, the authors have outlined issues related to the supply, demand, and pricing of social housing. The study also discusses social housing policies according to the 2014 Law on Housing and proposes measures to improve the social housing situation in Hanoi. The results indicate the necessity of improving infrastructure, strengthening price monitoring, and providing financial support for buyers and investors to promote a sustainable social housing market that meets the needs of the population.
Keywords: social housing, Hanoi, low-income individuals.
I. INTRODUCTION
In the current context, the rapid urbanization rate and population growth in major cities in Vietnam, particularly Hanoi, which holds the position of the capital, face numerous challenges in providing housing for residents, especially those with low income.
From 2023 to 2025, Hanoi will have an additional 157,000 households, while the housing supply during the same period is about 59,000 apartments, 9,000 low-rise houses, and approximately 18,700 social housing units expected to be sold. This leads to a shortage of about 70,300 housing units, making the demand for housing a pressing issue.
Social housing is a necessary solution to ensure the basic human right to housing. However, the social housing market in Hanoi currently faces many difficulties and limitations. These challenges include a scarcity of land funds, high construction costs, and complex legal procedures. This results in a shortage of social housing projects, causing many low-income individuals to face difficulties in finding suitable housing.
The current policies of the government and related agencies have introduced several support measures for the social housing market, but the effectiveness is still limited. Investors and businesses have not been sufficiently encouraged to participate in this field, creating a significant gap in providing housing for low-income individuals.
Therefore, researching the current situation and proposing solutions for social housing development for low-income individuals in Hanoi is necessary.
II. RESEARCH METHODS
- Secondary Data Collection Method
This study focuses on available secondary data sources, wherein data is collected from reports and research on social housing both domestically and internationally.
– Government data sources: Collect information from reports and statistics of state agencies such as the Ministry of Construction, the People’s Committee of Hanoi City, and related management units concerning social housing.
– Research by non-governmental organizations: Studies and reports from non-governmental organizations, international organizations such as the World Bank, UN Habitat, or specialized agencies on social housing.
– Academic research: Search and compile information from academic studies, theses, and specialized articles on the topic of social housing, especially in Vietnam and Hanoi.
- Data Compilation, Statistics, and Processing Method
The collected data on supply, demand, and prices in Hanoi are compiled. After collecting secondary data, the authors use Excel software to compile the data in a more scientific and systematic manner. Specifically, this data aims to assess the scale, scope, and development trends of social housing in Hanoi, providing an overview of the actual development situation of social housing.
- Analysis, Evaluation, and Comparison Method
From the analyzed data, the authors compare social housing in Hanoi with other cities both domestically and internationally to identify similarities and differences. This helps determine successful models and draw experiences that can be applied to Hanoi. At the same time, analyzing the strengths and weaknesses of current policies to propose necessary improvements is also clearly presented in the study.
III. Research Results and Discussion
- The Current Situation of Social Housing in Hanoi
1.1. Supply
From 2013 to 2017, the supply of social housing across Vietnam remained very limited. With a social housing supply rate of only 1.02% compared to the total housing supply in the market, it shows that social housing did not occupy a significant position in the real estate market. This severe shortage in supply not only highlights the imbalance in social housing development policies but also shows a large gap between demand and what is being implemented. However, when looking at the apartment segment, social housing accounts for up to 25.5% of the supply of this type.
Therefore, although it does not make up the majority of the supply in the market, social housing still contributes significantly to meeting the housing needs of low- and middle-income households, especially in urban areas. The large discrepancy between total supply and social housing supply is not only a challenge for the state in meeting the demand for affordable housing but also a matter that needs to be reconsidered in urban development policies and improving the quality of life for residents.
However, this figure has improved since 2017. From 2017 to 2020, Hanoi aimed to expand the supply of social housing to over 6.2 million square meters of floor space. This goal not only reflects the government’s efforts to improve living conditions for residents but also is part of a sustainable urban development plan. However, by 2020, the actual implementation only reached over 1.25 million square meters of floor space, which is only about 20% of the set goal. This number has increased but still only meets a small portion of the actual demand for social housing in the city.
Source: PMC Korea
1.2. Demand
The demand for social housing in Hanoi remains high due to population growth, high migration rates, and increasing urbanization. As of 2024, Hanoi’s population is estimated to be 5,431,801 people. In 1950, Hanoi’s population was 260,802 people. Thus, Hanoi has increased by 178,416 people each year, equivalent to an annual change rate of 3.4%. These population estimates and projections are derived from the latest update of the United Nations World Urbanization Prospects Report, indicating that the urban population is rapidly increasing.
As of 2023, Hanoi’s urbanization rate is 49.05%. The city aims to achieve an urbanization rate of approximately 60-62% by 2025 and about 65-75% by 2030. This rate indicates the expected and increasing urbanization in the capital region across the country.
The main factor contributing to the increase in urbanization is population growth, with a large proportion of migrants moving into the city. As of 2019, about 20% of Hanoi’s population were immigrants, meaning that out of every 1,000 people in Hanoi, nearly 200 were immigrants (General Statistics Office, 2019). The population growth outlook from 2020-2030 due to urbanization is classified into natural population growth and net migration. From this, a general calculation of the social housing demand for low-income households is derived.
Figure 2. Population growth chart in Hanoi from 1950 – 2024
Source: worldpopulationreview.com
1.3. Pricing
Analysis of housing price fluctuations for each type of housing in Hanoi and Ho Chi Minh City from 2015 to 2019 shows that, in the apartment segment, low-cost apartments had the highest price increase rate (Hanoi 7%, Ho Chi Minh City 20%), while high-end apartments had the lowest price increase rate. The pricing of social housing varies due to factors such as location, type of house, construction costs, and commercial area profits.
However, in 2013, social housing tended to be provided at prices above the limit of 15 million VND per square meter in many cities, including Hanoi and Ho Chi Minh City, due to the influence of financial support packages of 30 trillion VND. It is possible to provide social housing below 10 million VND per square meter by reducing construction costs when located in suburban areas or constructing lower-rise buildings.
Figure 3. Housing Price Index for Quarters in 2019
Source: PMC Korea
In Hanoi, most social housing projects are now being traded at twice the price compared to when they were first sold 5-7 years ago. As of now, the prices of some projects have doubled in a short period. For example, the social housing NHS Trung Văn apartments are currently priced at about 35-40 million VND per square meter, a 50% increase compared to the initial sale price.
The Rice City Linh Đàm project leads with a price increase from about 15 million VND per square meter to nearly 40 million VND per square meter. The HUD CT3 project and projects in Đông Mỗ and Đại Kim, with initial prices of about 20 million VND per square meter and 25 million VND per square meter respectively, have also recorded slight price increases, now reaching about 30 million VND per square meter.
The reasons for the price increase in most projects are the growing demand for affordable housing in the context of rapid urban population growth, especially in major cities where there is a significant discrepancy between demand and supply. Secondly, current land prices have also doubled compared to 5 years ago, and construction costs have increased by 50%, leading to a cost increase to about 17-18 million VND for standard 12-month construction plans, resulting in the lowest prices rising to 25 million VND per square meter.
- Social Housing Policies in Vietnam
In Vietnam, social housing policies are divided into two main groups: preferential policies for social housing development and support policies for social housing for low-income individuals. Specifically:
2.1. Preferential Policies for Social Housing Development
Table 1. Groups of Preferential Policies for Social Housing Development
| Regulations according to the 2014 Law on Housing |
Form of Social Housing Development | – Social housing can be developed by the state, companies or unions, individuals or families according to Article 53 of the 2014 Law on Housing. – The state invests in social housing using government budgets, government bonds, bonds, public development support, loans and development credit capital, or invests in social housing under the form of renting or purchasing after renting under BT contracts. – Enterprises or unions can invest in social housing for rent, lease-purchase, purchase or sale; or purchase, rent housing for workers to reside in. – Households or individuals can invest in social housing for rent, purchase after renting, or sale on legally residential land. |
Obligations of Social Housing Investment Projects | – First, the provincial People’s Committee (PPC) must plan a separate area for social housing rental investment projects. – Second, social housing investors in non-segregated areas must allocate 20% of social housing for rent, 20% of social housing can be sold after 5 years of rent. – In addition, under the decree on social housing management and development (Decree 100/2015/NĐ-CP), investors in commercial housing projects and urban development projects are responsible for investing 20% of the land for social housing. – Article 6 of the decree stipulates that companies in industrial zones are responsible for clearing social housing land and investing in infrastructure for workers. |
Investor Incentives | – The following incentives apply to companies or associations building social housing without using financial sources (state budget, government bonds, bonds, public development support, preferential loans, development credit capital) according to Clause 1, Article 58 of the 2014 Law on Housing: 1. Exemption from land lease fees and land use fees leased or allocated by the state for social housing construction investment. 2. Exemption and reduction of value-added tax or corporate income tax if most of the housing for rent is social housing. 3. May receive preferential loans from the social policy bank or credit institutions operating in Vietnam. Additionally, constructing social housing for rent has a lower interest rate and may receive longer loan terms compared to constructing social housing for lease-purchase or sale. 4. Some or all investments in technical infrastructure systems in social housing projects may be funded by the local PPC, and rental social housing may be funded for the entire infrastructure investment part. – Furthermore, according to Article 59 of the 2014 Law on Housing, organizations providing social housing for workers may receive the following incentives: 1. If an industrial or service production company purchases or rents housing for workers to live free of charge, or charges a rent not exceeding the rent price announced by the provincial People’s Committee, the cost of housing purchase or rent may be considered an expense when declaring corporate income tax. 2. When an industrial or service production company invests and provides housing for its employees free of charge, or provides housing with rental prices not exceeding the rental price announced by the provincial People’s Committee, the cost of building housing may be considered an enterprise expense when declaring corporate income tax. |
Source: Compiled by the authors from the 2014 Law on Housing
2.2. Support Policies for Social Housing for Low-Income Individuals
There are four social housing support policies according to Article 50 of the 2014 Law on Housing. Different groups of individuals have different types of support policies.
– The support policy in the form of rental, lease-purchase, and distribution of social housing applies to most beneficiary groups, except for low-income households in rural areas and households in areas affected by climate change.
– Households in affected areas, such as those impacted by climate change, and low-income households in rural areas are supported by providing separate housing programs instead of rental or pre-sale policies.
– Additionally, households in affected areas, such as those impacted by climate change, and low-income households in rural areas, as well as those who have contributed to the revolution, are exempted or reduced from land use fees.
– Individuals who have contributed to the revolution, low-income individuals in urban areas, industrial park workers, public security personnel (people’s army), civil servants, individuals returning state-owned housing, students, and pupils may receive preferential state loans from the Social Policy Bank.
The low-income group and industrial park workers in urban areas, the beneficiary group of this study, can receive preferential state loans from the Social Policy Bank and enjoy four support policies, including rental, lease-purchase, purchase, and distribution of social housing.
Table 2. Support Policies for Social Housing Beneficiaries according to the 2014 Law on Housing
Article 49. Beneficiaries of Social Housing Support Policies | Article 50. Forms of Social Housing Support Policies Implementation | |||
Beneficiaries meeting the requirements stipulated in Article 51 of the 2014 Law on Housing may be eligible for social housing support policies | Support in the form of rental, lease-purchase, or sale of social housing | Support by providing housing programs tailored to each beneficiary | Support in the form of land use fee exemption or reduction according to the land law | Support in the form of priority national loans from the Social Policy Bank or credit institutions |
1. Individuals who have contributed to the revolution | ○ | ○ | ○ | ○ |
2. Low-income households in rural areas |
| ○ | ○ |
|
3. Affected areas, e.g., climate change… |
| ○ | ○ |
|
4. Low-income individuals in urban areas | ○ |
|
| ○ |
5. Industrial park workers | ○ |
|
| ○ |
6. Public security personnel (people’s army) | ○ |
|
| ○ |
7. State civil servants | ○ |
|
| ○ |
8. Individuals returning state-owned housing | ○ |
|
|
|
9. Students | ○ (rental only) |
|
|
|
10. Resettled individuals | ○ |
|
|
|
Source: Compiled by the authors from the 2014 Law on Housing
- Some Solutions for Social Housing Development in Hanoi
3.1. Solutions to Promote the Social Housing Market
– Firstly, based on the analysis of the social housing market in Hanoi, from supply and demand to price fluctuations, it is necessary to have a multifaceted strategy to address these challenges. To balance supply and demand, the city needs to accelerate the construction of social housing, especially in areas with high demand. This should be accompanied by preferential policies such as tax reductions for investors, loan support, and expediting the construction permit process.
– Secondly, a comprehensive infrastructure development plan is required, not only to enhance the quality of life for residents but also to control social housing prices from rising too quickly. Key infrastructure projects such as electricity, roads, schools, and stations need to be implemented simultaneously with housing projects.
– Thirdly, an effective price monitoring mechanism needs to be established to prevent uncontrollable sudden price increases, ensuring that social housing remains within the reach of the majority of people. The government and related agencies should implement measures such as price ceilings or direct subsidies for buyers.
– Finally, to address financial issues for buyers and investors, the authorities need to work closely with banks and financial institutions to provide preferential home loan packages with flexible conditions. This will help improve capital accessibility and encourage investment in the social housing segment.
3.2. Policy Solutions for Social Housing
The issue of social housing development is a significant aspect of socio-economic development policy. To overcome difficulties and create momentum for social housing development, a comprehensive policy approach is necessary.
– Firstly, localities need to continue reviewing and perfecting appropriate planning to address the spontaneous real estate development and supply-demand imbalance of recent years. Positive measures should be taken to handle abandoned projects that are difficult to recover, significantly affecting the overall socio-economic development process and the ability to fund social housing land specifically. Encouraging the conversion of commercial apartment projects to social housing, mini apartments, etc., is also essential.
– Secondly, regarding preferential policies for social housing development, the state needs to continue reviewing and considering additional conditions such as exemptions from land use fees, land rent; a 50% reduction in value-added tax and corporate income tax; and loosening conditions for eligible individuals to purchase or rent social housing. Moreover, administrative procedures should be shortened so that investment enterprises can participate and implement social housing construction projects quickly and conveniently.
Additionally, credit support needs to be strengthened to develop both supply and demand. The term and conditions for concessional loans with low interest rates should be extended and relaxed for eligible beneficiaries with outstanding loans for purchasing, lease-purchasing social housing, building new houses, or renovating existing ones. In the short term, the disbursement of the 120 trillion VND credit package to support social housing development, mobilized from the capital of four state-owned commercial banks, should be accelerated, with disbursement until the end of 2030.
IV. CONCLUSION
Hanoi is one of the cities with a rapid urbanization rate, making housing demand urgent. Data analysis has provided insights into the current situation of social housing and challenges related to supply, demand, pricing, and existing policies. These issues include a supply shortage amid rising demand, increasing prices, and difficulties for low-income individuals to access suitable housing.
Although the government has made efforts to adjust policies to meet this demand, actual implementation still faces many shortcomings and has not achieved high effectiveness. To promote the social housing market, proposed solutions include improving preferential policies for social housing development, enhancing infrastructure, and improving financial conditions for both buyers and sellers. These solutions not only help address the social housing problem but also aim towards sustainable urban development for Hanoi, ensuring basic housing rights for all social classes, especially low-income households.
References
- Bộ Chính trị (2022), Resolution No. 06-NQ/TW dated January 24, 2022, of the Politburo on “Planning, Building, Managing, and Developing Sustainable Urban Areas in Vietnam until 2030, with a Vision to 2045”.
- Hanoi Population 2024, [https://worldpopulationreview.com/world-cities/hanoi-population](https://worldpopulationreview.com/world-cities/hanoi-population)
- People’s Committee of Hanoi City (2014), Decision No. 6336/QĐ-UBND dated November 28, 2014.
- General Statistics Office (2019), Press Release on In-Depth Research Results of the 2019 Population and Housing Census.
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