Document(s) 13 of 30

Pre- and post-renovation urban housing problems: an overview

The pre-renovation or state subsidy period: 1954-1985

Housing policies in this period, including those on investment, distribution, and rent, partially resolved the urgent urban housing needs but did not satisfy the needs of the majority of people. Furthermore, the system created many difficult social problems, particularly the inequality in the provision of housing for different groups of people who worked in the state sector.

Housing policies in the first 10 years after the re-establishment of peace from 1954 to 1964 were, in general, unchanged and housing provision, although poor, was not as urgent as in the next period. In Hanoi, for example, there were 6 square metres of housing per capita in 1954; by 1994, this amount had dropped to 4 square metres per capita.

After the Indochina war of resistance, some of the urban residents in the North migrated to the South or returned to their rural homes. The French colonial cities were not destroyed by the war of liberation and were taken over intact by the state. Thus, housing policy was not an important state initiative in this period. In fact, it was limited to the issue of distributing housing to state employees, and did not take account of the housing requirements of other urban residents.

In the period from 1965 to 1975, the state budget was used in the North to build neighbourhood units with two- to five-storey apartment buildings based on the Soviet model. Due to a lack of experience in urban planning and management, the state paid more attention to the construction of houses rather than the organization of urban space and infrastructure according to a master plan. Thus, housing construction in this period exceeded the capacity of the physical infrastructure such as water, drainage, electricity, roads, and environmental sanitation. The extremely high subsidy resulted in rents as low as one percent of an employee’s salary. This amount could not cover the maintenance and upgrading of houses, which quickly deteriorated, creating damage and waste.

The amount of urban housing constructed in the period from 1965 to 1975 varied between the North and the South. This was due to the difference in the political systems and the opposite impact of urbanization. Housing survey data for 1994, collected with the Population Census, shows that as of 1989, 42 percent of Ho Chi Minh City’s population lived in houses built from 1961 to 1975. In Da Nang, the second largest city of the South, this rate was 37 percent. By comparison, in the first years of industrialization in the North, the corresponding rates were 23.6 percent in Hanoi and 19.8 percent in Hai Phong. The difference can be attributed to the impact of the US Air Force war of sabotage (Viet Nam General Statistics Office 1989).

In the following 10 years, from 1975 to 1985, a National Housing Program, mainly for cities, was jointly implemented by the Ministry of Construction and State Research Institutes in order to improve housing conditions. The program continued the principle of egalitarian distribution with heavy subsidies from the state budget. Production was dominated by technical and economic considerations and the housing was typically poorly equipped four- to five-storey apartment blocks with little comfort and a monotonous appearance.

In the 1980s, after the experience of the previous 20 years, several improved housing models were introduced that were more convenient and had higher quality buildings with a better appearance. Furthermore, an experiment in the trading, expansion, and construction of houses under the formula "state and people cooperate to build houses" was tried in some areas.

In the 10 years prior to renovation, from 1975 to 1985, a high rate of housing construction was achieved. This represented the following percentage of the stock in three of the four main cities: Hai Phong 43.3 percent, Hanoi 27.1 percent, and Da Nang 31.8 percent (Viet Nam General Statistics Office 1990, p. 32).

Meanwhile in Ho Chi Minh City, there was a difficult standstill. Due to obstacles in management and unclear legal ownership, the city did not take measures to encourage the maintenance, upgrading, or construction of houses. In the 10 years prior to renovation, Ho Chi Minh City housing stock only increased by 14.5 percent (Ho Chi Minh City Statistics Department 1995a).

In the period of totally subsidized housing, the state tried to serve as the sole producer and distributor of housing for most urban residents. This system did not work as effectively as expected. The main reason for the shortcoming was the imbalance between supply and demand, financial constraints of the state budget, and difficulties in the administrative allocation of housing which created many disputes and complaints. The policy of state subsidization and distribution of housing fostered a passive behaviour among urban residents who did not care to maintain their houses because maintenance was viewed as the state’s responsibility.

The outcome of these policies was that up to the early 1990s, only 30 percent of the state’s employees, mainly those in Northern cities, received housing from the state. The remaining 70 percent had to make their own housing arrangements or live in very poor conditions (Viet Nam Ministry of Construction 1996). Thus, the goal of the socialist housing model was not achieved. It was followed by renovation and the emergence of a new array of housing problems.

The renovation or big change period: 1986-1996

In 1990, one-third of new housing was built by individuals using their own capital. In 1992, the investment in housing production by residents who obtained building permits was double the state budget for housing. Furthermore, it is estimated that an equal amount was invested by residents who did not obtain building permits. A house construction boom, mainly by households, can be seen everywhere. Houses mushroomed as people tried to improve their living conditions on their own by building new houses and by improving their existing accommodation, including nominally state-owned housing.

Government ministries at all levels have issued hundreds of policies and regulations to promote housing production, including the transfer of state-owned houses to a commercial basis. Particularly important is the 6 April 1991 Housing Ordinance, which formalized the termination of the state-subsidy system of housing provision and its replacement by a new market-oriented system. The state has also created favourable conditions for investment in housing production by management organizations and units in the cities. These efforts have paid off as the housing stock increased 50 percent in the period from 1960 to 1993 (Viet Nam Ministry of Construction 1996).

Two important outcomes of renovation are the increased amount of housing produced and the increased diversity of housing producers and types of housing. In Ho Chi Minh City, of all the housing added since liberation in 1975, 86 percent of the houses and 93 percent of the floor space was added in the eight years from 1986 to 1993. From 1987 to 1989, about 4 000 apartments were added annually rising to 8 800 in 1990. Thus, there has been a doubling of housing production every two-to-three years. In 1991 and 1992, about 16 000 housing units - mostly apartments - were added annually with a total floor area of 500 000 square metres.

In 1993, due to a growing demand for multistorey apartment buildings in Ho Chi Minh City, 2.8 million square metres of floor space was produced by all sectors, a fivefold increase over 1992. From 1986 to 1993, 40 percent of new housing was produced by state institutions and 60 percent by urban households (Ho Chi Minh City Housing and Land Department 1995).

In Hanoi, the tempo of production has been slower than demand and still reflects the old state-subsidy system. It is clear, however, that there is a growing diversity of housing producers. According to data from the Hanoi Housing and Land Department for 1991-1993, Hanoi produced 700 000 square metres of floor space. The 1991-1995 five-year plan target was one million square metres. This construction included about 500 000 square metres or 74 percent private construction, which increased to 84 percent in 1994 (Hanoi Housing and Land Department 1995).

These data indicate that there has been a transformation in the urban housing sector in Viet Nam as a consequence of renovation. Despite the achievements, many serious housing problems persist.

Per-capita floor space is still extremely low due to population growth and increasing demand. Thus the lack of housing space remains a fundamental problem in Hanoi, Ho Chi Minh City, and other urban centres. In many urban regions, tens of thousands of households live in very bad conditions. According to a Ministry of Construction report, 30 percent of the people in Hanoi still have less than 3 square metres per person. In Ho Chi Minh City, there are 150 000 temporary dwellings, including 43 000 dilapidated dwellings and 24 000 slum dwellings along the city’s canals and small rivers.

As a consequence of the old economic order, as well as the introduction of market mechanisms, the inequality in housing and the housing problems of the urban poor have increased. These households have little chance to improve their housing conditions through market mechanisms, nor do they benefit from any government assistance.

Of the total 54.4 million square metres of urban housing, 32 million square metres require immediate repair and maintenance, and 1.7 million square metres need to be removed for new housing construction. However, due to the shortage of investment capital, millions of people continue to live in very bad housing conditions (Viet Nam Ministry of Construction 1996). (See Table 1.)

Table 1. Total housing floor area produced in urban centres of Viet Nam: 1991-95 (square metres).
 

Year	All Urban Centres	Hanoi	Ho Chi Minh City	6 Class II Cities1
1991	1 148 471	140 771	450 000	128 000
1992	2 292 718	163 378	56 040	202 600
1993	5 373 778	220 078	2 791 000	479 900
1994	6 021 011	224 311	2 380 000	532 100
1995	10 899 228	251 548	2 269 460	962 400
Total	25 735 206	1 000 086	7 946 500	2 305 000

Source: Viet Nam Ministry of Construction. Draft Document on Urban Housing Development Program 1996-2000. Hanoi: Ministry of Construction, 1996, p. 1.

¹ Class I cities (Ho Chi Minh City and Hanoi) have over 1 000 000 population. Class II cities (Haiphong, Vinh, Da Nang, Hue, Bien Hoa, Can Tho) have 350 000-1 000 000 population.

The management of the public sector is still problematic due to widespread speculation practices, including the illegal buying and reselling or leasing of the state’s rental houses, which occurs beyond the control of the municipalities.

In addition, the regulation of housing construction is ineffective. The spontaneous housing construction boom has led to illegal occupation of land and chaos in the implementation of urban planning. This has had bad consequences for architecture, the built environment, infrastructure, supply and services, and the landscape of Viet Nam’s cities.

Current housing policies are not entirely suitable for the present situation and only provide a temporary solution to meet urgent housing needs. A more comprehensive policy or strategy for housing is needed to replace the former policy of subsidized housing.

Moreover, in the present insufficient legal environment, the lack of regulations, the overlap of functions and responsibilities, and the existence of so-called "vacuum zones" beyond state control have created many institutional constraints hampering development of a real housing market. Thus a comprehensive strategy for urban housing as well as long-term programs for housing production remain "in preparation," although this task should have been completed as soon as the state subsidy housing policy was abandoned.

The dynamics of urban housing production in the renovation period: diversification of types and producers

The classification of housing by producer

Although each nation has its own specific characteristics and therefore differences in housing policy, one of the recent trends is that governments have tried to restrict their direct participation by reducing the production of housing in the public sector and giving more attention to supports that enable housing production in the private and popular sectors. Furthermore, many countries have developed their housing policies and programs at national, local, and sectoral levels - and these usually support a sequence of development projects.

The enabling approach is used to reduce the state’s direct production of housing and to encourage or enable people, social groups, and communities to build their own housing. Many different schemes have been devised to implement this strategy, including slum upgrading, basic sites and services provision, and community self-help initiatives. This experience is amply described in the English language housing literature (such as Luan and Leaf 1998). Regrettably, Viet Nam has only had access to this in recent years and it is not widely known among researchers, housing policy analysts, and policymakers.

Housing supply in Viet Nam

1. In urban areas overall, only 22.1 percent of housing is state owned. The housing is unequally distributed with 48.1 percent in Hanoi and 18.7 percent in Ho Chi Minh City. (Luan, 1995b).
2. The number and quality of state-owned dwellings in Viet Nam is low. The supply is measured by floor area per capita (square metres per person) rather than the number of people or families per housing unit.
3. Vestiges of the subsidy housing system are a still a strong part of people’s psychology as well as the public sector’s attitude to management, distribution, and control of housing production. Thus the private and popular sectors have for many decades remained outside of the state’s attention.
4. Statistics on urban housing are insufficient or unavailable, which makes it difficult to apply commonly used classifications to analyze and compare the Vietnamese situation. Since the last Census in 1989, there has not been any general survey of urban housing and little is known about the amount that has been produced by the private and popular sectors.
5. Under the impact of renovation, major cities in Viet Nam are changing daily while the planning capacity and managerial arrangements remain extremely limited. As a result, it is easy to see the chaos of uncontrolled housing construction.

Document(s) 13 of 30