Vietnam’s population and economy are growing fast, and demand for housing is increasing accordingly, especially in Hanoi and Ho Chi Minh City. Thus, these major cities of the country are flooded with new construction, and their real estate market is sizzling hot. But besides that, there are lots of huge problems affecting significantly to the housing market development such as traffic congestion, environmental pollution, urban flooding, etc. 


The current serious problems and their effects on housing market

1. Headaches from traffic congestion

Traffic jams that frequently takes place in Hanoi capital and Ho Chi Minh City is becoming a huge nuisance for millions of city dwellers.Do Thu Hang, deputy head of research at Savills Vietnam, said traffic congestion in Hanoi worse than in HCMC because the survey found that it took an average of 45 minutes to travel through a congested road in Hanoi while it took 30 minutes in HCMC.

The number of private vehicles in Hanoi and HCMC has increased 35% annually in the past five years, double growth of people there. The figure forecasts to triple in two cities by 2025. Hang said fast-growing population, limited space for road expansion and increasing auto ownership would result in major challenges for the two cities. ¹

In Hanoi, a report of the capital shows that it managed to eliminate 20 out of 44 traffic hotspots in 2016. However, it also recorded the reappearance of four areas prone to traffic deadlock and another 13 new ones. The total number of traffic hotspots in Hanoi stands at 41. ²

In HCMC, Data of the Department of Transport showed, last year saw 27 traffic jams happening on roads leading to Tan Son Nhat International Airport, Cat Lai Port and some other places. ³ And the department has also put the blame on the sharp upsurge of vehicles. The city now has nearly 7.5 million motorcycles and 600,000 cars. Worse still, 1 million motorcycles and 60,000 cars which are registered in other provinces entering the city. Meanwhile, available land for traffic infrastructure development is limited and the city just has 4,155 km of road this year. ⁴ Traffic jams in Hanoi and HCMC are being put on “red alert”. If infrastructure connections are not guaranteed, customers will not come to buy houses.


2.      Flooding and water pollution

Many voters are still anxious that rapid housing development and urbanization would encroach on hundreds of inner-city canals and lead to many of them disappearing, affecting water drainage in case of heavy rains or high tides and causing flooding in HCMC. Voter Cao Trong Tung in Thao Dien Ward, District 2 said Thao Dien area had recently been heavily flooded during high tides. He wondered if this was a consequence of rapid urbanization that had led to the loss of dozens of canals.

Meanwhile, voters in Ward 1, District 5 said the municipal government should soon figure out the reason why roads were now more flood-prone. They wondered if this was a result of the low frequency of drain dredging, once a year instead of 4 times a year as before. People in Ward 7, District 8 complained that there is currently no drainage system on Le Quang Nghi Street, resulting in severe flooding which affects their livelihood. A tidal embankment has been put into operation for only a year here, but flooding still persists. Statistics of the canal management authorities in HCMC show that there are now nearly 3,000 canals in the city with the total length of over 4,300 km. The number of canals responsible for urban drainage is 849 with a total length of 1,094 km, while the remainder are for agricultural irrigation and water transport. ⁵

Besides flooding problem, Country side Today newspaper reported, more than 2,000 canals around HCM City have been seriously polluted threatening people’s health. ⁶ The pollution of canals in the city has been worsening as large quantities of household and industrial wastewater, as well as rubbish, are being discharged or dumped into canals, according to the city’s Department of Natural Resources and Environment. DoNRE added, there are 9 industrial zones and 5 garment, cloth dyeing, footwear and fertiliser businesses in District 9. The wastewater discharged by the businesses was one of the reasons for the pollution. ⁷ A rapid increase in population, a lack of public awareness about environmental protection, and drainage of rainwater and wastewater into the same systems has contributed to the pollution. The department said the canals were also being polluted by large amounts of waste from neighbouring provinces (Binh Duong, Long An, etc.) The bad odor and flooding issue has negatively affected Saigon’s real estate. Flooding from continuous rains forced the investors to explain to customers about relative roads and flood -prevention projects. Also in the south bad odors caused buyers to delay the payment, even giving up the buying decision.


So what are the solutions?

  1. Traffic congestion problem

According to the Vietnam Automobile Manufacturers Association (VAMA), auto sales surge to all-time high, and touched an all-time high of 300,000 units in Vietnam last year. The report showed, there were some 22,840 passenger cars, 9,370 commercial vehicles, and 1,085 special-purpose autos. And over 304,427 autos found buyers last year, up a staggering 24% over the year-ago period. ⁸

Besides the auto and motorcycle market also expanded after years of decline. A Vietnam Association of Motorcycle Manufacturers (VAMM) report shows over 1.67 million motorcycles were delivered to customers in the final 6 months of 2016. Five VAMM members, namely Honda, Piaggio, Suzuki, SYM and Yamaha Motor, sold over 3.12 million motorbikes last year, a 9.5% year-on-year increase. VAMM noted the figure would be higher if exports were included. ⁹ It is time to draw up a comprehensive rather than haphazard traffic c¹ontrol plan which includes strong measures such as setting annual quotas on new motorcycle, automobile and taxi registrations, fixing the number of vehicles in circulation, discouraging automobiles registered in other provinces from entering the city by slapping high charges, and moving hospitals and schools out of downtown.

In Ha Noi, Deputy Prime Minister Trinh Dinh Dung warned that Ha Noi should brace for worsening traffic congestion in the next 5 years if no effective policies to curb the rising number of personal vehicles, especially cars, are put in place. Dung also asked the city to continue moving manufacturers out of the urban area, but not to replace them with high-rises. Dung also asked the city to continue moving manufacturers out of the urban area, but not to replace them with high-rises. ¹⁰ The Hanoi People’s Council has approved a master investment plan to use VND452.24 trillion (US$19.9 billion) for developing 38 urban traffic infrastructure projects. The capital city will also focus on solutions to call for investments and give financial priority to major projects. ¹¹ In HCMC, also on Jan 15, 2017, the Southern Airport Transportation Joint Stock Company (SATSCO) launched route No.159 with high-quality buses between the Eastern Coach Station and An Suong Coach Station and passing through the airport. ¹²

The HCMC government has proposed the Ministry of Planning and Investment arrange Japan’s official development assistance (ODA) for building Metro Line No. 3a, which would connect with Metro Line No.1 from Ben Thanh to Suoi Tien to form a radial urban railway line, linking Suoi Tien Bus station and Ben Thanh station and Mien Tay Coach Station.

Furthermore, more roads in HCMC have been made one-way in 2017 to fight soaring traffic congestion. According to the municipal Department of Transport, the roads affected by this plan are prone to traffic jams, especially at rush hour. ¹³ In addition, HoREA has also proposed the Ministry of Transport to allow motorcycles to use an approach road leading to the HCMC-Long Thanh-Dau Giay Expressway, which is apparently aimed at boosting real estate business along the route. And according to its proposal, the three-meter-width lanes could be renovated into motorbike lanes. ¹⁴ HCM City has agreed to the transport department’s proposal to open temporary smart parking lots in downtown areas to meet the demand. Many projects have been planned for years but have been delayed due to red tape and complicated administrative procedures.


  1. Flooding and water pollution

DoNRE deputy director Nguyen Thi Thanh My said the department would inspect production establishments that release wastewater into canals, especially in pollution hot spots.

This year, the municipal authority has continued to carry out several projects on canal pollution. The projects include building wastewater treatment factories such as Tham Luong-Ben Cat Factory with capacity of 131,000cu.m per day; Nhieu Loc-Thi Nghe Factory with capacity of 480,000cu.m per day; and upgrading treatment capacity of Binh Hung Factory to 141,000cu.m to 469,000cu.m per day. ¹⁵ The department has worked with neighbouring provinces to draw up regulations to control wastewater discharge from enterprises near the city’s borders. Dredging canals and collecting rubbish will also be implemented during the year, she said. For enterprises having wastewater treatment facilities that release more than 1,000cu.m of wastewater a day must use an automatic wastewater monitoring system. And enterprises that continue to pollute will have to relocate or cease operations. The urban planning need to be reviewed? The infrastructure development has failed to keep up with fast growth in apartment towers. Tran Trong Tuan, director of the HCMC Department of Construction, said that traffic congestion in Hanoi and HCMC had resulted partly from the mushrooming of condo buildings, especially in downtown areas.

Tran Ngoc Chinh, chairman of the Vietnam Urban Planning and Development Association, said that hospitals and schools in these cities have not been moved out of inner-city areas and to make matters worse, they have even been expanded, putting pressure on the current infrastructure systems. Minister of Construction Pham Hong Ha said urbanization is an inevitable trend but poor planning has led society to pay a dear price. Currently, the neck-breaking urbanization process in Viet Nam is indeed exerting enormous pressure on the urban centres. Experts argue that planning, alone, won’t save cities from this overload.¹⁶ This rapid but poorly managed process has created persistent headaches for authorities and nuisance for urban dwellers – floodings and congestion in the two metropolises Ha Noi and HCM City are cases in point.