According to the WB, after the real-estate bubble from 2009 to 2012, the recent VND30 trillion (US$1.5 billion) housing stimulus package, launched by the government in 2012, has helped to reorient developers and lenders toward the affordable middle income market where there are real home ownership needs. — Photo kienviet.net

HA NOI (Biz Hub) — The share of the urban population is expected to reach 50 per cent by 2040, with an estimated 374,000 additional housing needed in cities each year to cope with demand.

The information was released in a new World Bank (WB) report "Viet Nam Affordable Housing - A Way Forward", which said the structural shift out of rural areas and toward a higher-productivity manufacturing and service-based economy would drive population growth, leading to higher demand for housing in cities.

As Viet Nam continues to urbanise rapidly, adequate supply of affordable housing will be integral to achieving national development targets and enable the country to maintain a high rate of growth, with cities contributing a growing share of jobs and gross domestic product (GDP), the report said.

"Urbanisation 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 to helping Viet Nam achieve its goals for increasing productivity and inclusive urban growth," the report said.

However, despite economic growth, Viet Nam still has a substantial deficit of quality housing, the report said.

According to the report, almost 20 per cent or approximately 4.8 million households in Viet Nam are still living in poor conditions. Meanwhile, the majority of new demands for housing will be concentrated in only a few major cities and industrial zones.

The Red River Delta Region surrounding Ha Noi and the South East Region around HCM City will account for around two-thirds of the new housing demand, the report added.

According to the WB, after the real-estate bubble from 2009 to 2012, the recent VND30 trillion (US$1.5 billion) housing stimulus package, launched by the government in 2012, has helped to reorient developers and lenders toward the affordable middle income market where there are real home ownership needs.

National Affordable Housing Programme

A revised Housing Law, passed by the government in 2015, 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, addressing the shortage of affordable rental housing, the WB said.

The WB suggested that Viet Nam should increase and re-orient government spending in the housing sector, especially focussing on programmes that support and target the lowest two income quintiles and high growth cities, where the need for housing is most urgent.

Besides, a National Affordable Housing Programme should be established, which acts as a vehicle to implement the 2015 Housing Law and structure the government's interventions in the housing sector, the WB said.

This programme would include initiatives to improve access to housing finance, stimulate supply of affordable rental housing and enable delivery of core housing to support the self-built housing sector, it said.

It added that Viet Nam should prioritise structural reforms to improve governance of the housing sector and urban land management.

The country should also support market development by investing in the building blocks of a functioning housing sector, including regulatory reforms to incentivise greater private sector participation, improved real estate information systems, as well as monitoring and evaluation standards, the WB said. — VNS