Vietnam Urged to Develop Rental Housing to Stabilize Property Market

Market Imbalance Spurs Call for New Housing Strategy

Vietnam’s real estate market has undergone a period of rapid expansion, contributing significantly to economic growth, infrastructure investment, and urban development. However, this performance masks a critical structural imbalance: a market heavily skewed towards high-end properties while affordable housing for the majority of the population remains critically scarce, according to Mr. Nguyen Van Dinh, Vice Chairman of the Vietnam National Real Estate Association.

Mr. Dinh, who also serves as Chairman of the Vietnam Association of Realtors (VARS) and Director of the Vietnam Institute for Real Estate Research (VARS IRE), notes that while Vietnam has cultivated a robust market for home sales, it has yet to establish a professional, long-term rental housing system guided by clear state policy. The current rental market is largely fragmented, small-scale, and unplanned, often failing to provide stable, quality living conditions for a growing segment of the population.

Surging Demand from Workers, Students, and Displaced Families

Despite a traditional preference for homeownership, demand for rental accommodation is substantial and growing. The Vietnam General Confederation of Labor estimates that between 4.5 and 5 million workers are employed at industrial parks nationwide, the majority of whom rent, often in substandard conditions. In major urban centers like Hanoi and Ho Chi Minh City, the number of renting households is steadily increasing, driven by young people, migrant workers, and those starting their careers.

Hanoi provides a stark example of this rising demand. As northern Vietnam’s largest hub for education and employment, the capital attracts hundreds of thousands of students and young workers annually. This influx creates a sharp spike in rental demand between June and September as students secure accommodation for the new academic year.

Compounding this pressure are large-scale urban renewal and infrastructure projects that are displacing thousands of households. According to the Hanoi People’s Committee, local authorities are conducting land clearance for approximately 1,428 projects. These include major developments such as the Hoang Cau - Voi Phuc section of Ring Road 1, the Tu Lien Bridge, and the Tran Hung Dao Bridge.

Looking ahead, Hanoi plans to recover nearly 24,824 hectares of land for more than 3,100 socio-economic development projects between 2026 and 2030. This activity will continue to fuel demand for temporary and rental housing, as the current supply of resettlement housing cannot meet immediate needs. Many affected households opt to rent near their former residences to maintain employment, schooling for their children, and community ties, further straining the local rental market.

Beyond these groups, long-term renting is becoming an increasingly practical option for young professionals and families who require years of savings to purchase a home. This sustained demand, Mr. Dinh argues, forms a strong foundation for developing a professional rental housing sector that can support social welfare, labor mobility, and sustainable urban growth.

The Need for a Professional 'Starter Housing Ecosystem'

The proliferation of privately-built boarding houses, while meeting some immediate needs, is not a sustainable solution. Most workers in these informal developments live in small, overcrowded, and poorly equipped units that pose significant safety hazards, particularly fire risks. A series of serious boarding-house fires in Hanoi and Ho Chi Minh City in recent years has brought the issue of rental housing quality to the forefront of public concern.

In this context, rental housing with clear legal status, reliable quality, convenient transport connectivity, and reasonable pricing is becoming essential. Such developments offer an alternative for those unable to buy a home and help create a healthier balance between genuine housing demand and speculative investment demand.

The surge in demand for basic rental units reflects a deeper issue: a growing shortage of entry-level housing. In previous years, young people had access to affordable options like small apartments, renovated collective housing, and reasonably-priced suburban developments, which served as a first step on the property ladder. Today, escalating land prices and construction costs have made such affordable housing increasingly difficult for developers to build, polarizing the market.

Mr. Dinh suggests the challenge is not merely a lack of social or affordable housing, but the absence of a broader “starter housing ecosystem.” This ecosystem would allow young people to access suitable housing early in their careers before progressing toward homeownership. Within this framework, professional rental housing should be considered a key component, alongside social housing and affordable commercial housing, to ensure everyone has access to quality accommodation at a reasonable cost.

Lessons from International Housing Models

Many developed countries view a robust rental market as a pillar of social welfare and urban stability. Germany, for instance, has one of Europe’s lowest homeownership rates at approximately 46%, yet it consistently ranks as one of the world’s most livable countries. Its success is underpinned by strong tenant protections, including the Mietspiegel system—a reference rent index published by local authorities to regulate rent increases and provide long-term stability for renters.

Singapore has adopted a state-centric approach, with over 80% of its population living in housing developed by the Housing and Development Board (HDB). Alongside its homeownership programs, Singapore maintains a heavily subsidized public rental system for low-income households, with developments fully integrated with schools, healthcare, transport, and public amenities.

In South Korea, the government has expanded long-term rental housing through the Korea Land and Housing Corporation (LH). This state-owned entity develops or acquires apartments and leases them for 20-30 year terms to students, newly-married couples, and low-income households, supported by long-term financing from the National Housing and Urban Fund.

The common thread in these international models, Mr. Dinh highlights, is the decisive role of the state. Rental housing projects typically require 15-25 years to recover investment costs and generate relatively modest returns, offering limited incentive for private developers to participate at scale under normal market conditions.

Crafting a Supportive Policy Framework

To encourage private sector participation, the state must take the lead in creating supportive policies and coordinating resources, particularly in planning, land allocation, financing, and rent management.

Mr. Dinh proposes several policy tools. Authorities could allow developers to defer land-use fee payments, reduce financial obligations during a project's early years, or link payments to operational performance. This would ease initial capital pressure while preserving long-term government revenues.

Vietnam could also explore flexible mechanisms that allow projects to shift between rental and for-sale models. Under such a system, units converted for sale would be required to fulfill all land-related financial obligations, while units remaining as long-term rentals could continue to benefit from phased payment arrangements.

Crucially, the development of long-term financing instruments—such as housing savings funds, low-interest credit programs, and tax incentives—is essential. Without a specially-designed institutional framework, attracting large-scale private investment will remain difficult.

International experience shows that success hinges less on capping profits and more on providing access to long-term, low-cost capital. Returns should be determined by market-based mechanisms that reflect financing costs and project risks, balancing the interests of the government, developers, and tenants.

Balancing Ownership Aspirations with Market Stability

For many years, real estate in Vietnam has been viewed as a primary store of wealth, a cultural preference that has fueled market growth but has sometimes allowed investment demand to overshadow genuine housing needs.

A sustainable housing market, Mr. Dinh concludes, is one that offers a wide range of options suited to different income levels. While those with sufficient resources can pursue homeownership, lower-income groups should have access to quality, affordable rental housing.

Expanding the rental sector does not mean limiting legitimate ownership or investment aspirations. Rather, it helps create a more balanced market structure that better accommodates the distinct needs of housing, ownership, investment, and renting. This approach forms the foundation for a more efficient, inclusive, and sustainable real estate market in Vietnam and is consistent with the housing policy direction outlined by Party General Secretary and State President To Lam.