THE RESIDENTIAL HOUSING MARKET IN HANOI - A BUYERS' PERSPECTIVE

Abstract

During the past few decades, Hanoi has experienced rapid economic development. As a result, the city has been suffering from stock shortage, obsolescence and unaffordability of the housing system. This study provides a detailed analysis on the housing market in Hanoi. Because of the inadequacy of the legal framework and lack of incentives for private developers, very few housing projects are targeting the lower income groups. The wide gap between demand and supply is not likely to be removed in the near future. A survey was conducted among individuals and households without home ownership in order to understand the perspectives of potential buyers. Results of the survey reaffirmed the deterioration of the housing stock as well as the need for better living conditions of the city residents. It also reveals many differences in housing preferences between income groups. Hypothesis testing using one-way and factorial ANOVA indicated that the rent burden relative to income is, not surprisingly, heavier on the lower income households. Furthermore, this group also tends to receive less financial assistance from their family compared to those from higher income background. Affordability study using the Price-to-Income method and Housing Affordability Index showed that the housing market in Hanoi is highly unaffordable compared to many other cities in Vietnam. Assuming a mortgage is used, with the current high interest rate environment and stringent loan conditions, housing becomes even less affordable for a normal Vietnamese family living in Hanoi.