HANOI’S HOUSING MARKET NEEDS THE BETTER PLANNING AND MANAGEMENT
Hanoi’s housing market and infrastructure have been under tremendous pressure due to the expansion of urban space over 3,328 sq.km, tripling the former average and the fast population growth accordingly, 21% between 2008 and 2016, as well as the city’s poor planning and management in urban development. 1)
Hanoi’s housing market has not met the actual demand
The latest report by CBRE showed that a total of 8,800 new condos were put on sale in Hanoi’s realty market over the first quarter this year, 6,600 units of which have already found buyers.2)
The plentiful supply aims to keep up with the current surging growth in the middle-class population of Hanoi, which is set to continue rising amid the country’s rapid economic development. In combination with increasing demand for condos, buying prices and rental costs are expected to rise as well.
However, according to Nguyễn Hoài An, director of CBRE Việt Nam’s Hà Nội branch, in the second quarter of this year, there were 6,534 units launched from 19 projects in Hà Nội, down by 20% y-o-y. In terms of sales performance, 5,900 units were sold, down by 22% from 2017. Besides, the average selling price from developers was recorded at US$1,332 per sq.m, down by 0.4% q-o-q but up by 0.4% y-o-y.
The luxury segment in Hà Nội is quite small, so prices were unchanged. The mid-end and affordable segments were more competitive due to the large demand in the market, so prices fluctuated. “This is a good signal because the market is stable. The second quarter of this year is considered as a period of adjustment in the Hà Nội property market before entering a new development stage,” said CBRE Việt Nam managing director Đặng Phương Hằng. 3)
But this is not a good sign for actual customers because in the first half of 2018, the number of affordable apartments opened for sale in Hanoi decreased by 20% over the same period last year. CBRE forecast that the supply of affordable products will remain scarce until the end of this year. 4)
Poor planning and management
Besides the lack of affordable housing supply, the city’s adequate urban planning and management have led to an overly dense urban population and an overloaded transport infrastructure, affecting the lives of local residents.
There are more than 5 million motorcycles and 500,000 cars in Hanoi now while land for road is just little which accounts for only 10% of the total in the city, leading to constant traffic congestion.
Furthermore, the overloading parking lot has made residents’ living more difficult as well. According to Nguyễn Minh Huyền, a resident from Kim Văn-Kim Lũ urban area, the underground parking area is not equivalent with the number of residents living here. She needs to spend lots of time to take her motorbike out of the parking lot and due to the traffic jam she is usually late for work. In addition, there is a poor construction planning when 6 adjacent apartment buildings were built within 400 metres of National Highway 70 with around 2,000 people in each building.
According to another resident there, Phạm Minh Đức, because the developers tried to heighten their buildings for their profit by accommodating more residents, and they have ignored other factors such as transport infrastructure or public facilities to serve residents. 5)
These facts shows that the infrastructure development has failed to keep up with fast growth in apartment towers. Moreover, the city also faces severe environmental pollution as the volume of solid waste annually increases 15% and over 80% of garbage from households in the city is buried.
To solve these issues, Hanoi needs nearly VND250 trillion (US$11 billion) for its urban infrastructure projects from 2016 to 2020, including VND150 trillion for key projects such as urban railways, ring roads and environmental protection projects. However, the city’s budget now just can meet around 36.4% of that figure, or VND93 trillion. 6)