Developing high-density residential areas near public transit lines helps expand access to housing

Growing shortage of affordable housing

According to Savills Vietnam, the apartment market in major cities such as Hanoi and Ho Chi Minh City is becoming increasingly unbalanced. Before 2020, Class C apartments, the segment most affordable for the majority of working people, accounted for more than 80% of total transactions. However, between 2021 and 2025, their share fell to below 35%. More concerning, high-end Class A and Class B apartments accounted for more than 95% of transactions in Hanoi.

Affordable apartments are becoming increasingly scarce in major cities. In Ho Chi Minh City, Class C apartments now make up only about 29% of primary supply. The situation is even more severe in Hanoi, where no new Class C apartment projects were launched in the first quarter of 2026. The long-standing imbalance between supply and demand has continued to drive prices higher. Statistics show that average apartment prices in Hanoi have more than doubled since 2009, placing growing pressure on people looking to buy homes to live in.

Survey data from Batdongsan.com.vn revealed a concerning reality: 61% of respondents purchased real estate for investment and asset preservation, and more than 70% of them used borrowed funds as financial leverage. People with genuine housing needs, especially those seeking social housing, face significant barriers due to purchasing requirements, administrative procedures, and limited supply. This has created a major paradox: those who need homes to live in are finding it increasingly difficult to buy one, while many buyers purchase properties mainly to preserve wealth or wait for prices to increase.

Against a backdrop of rising real estate prices and signs that the market is moving away from genuine housing demand, General Secretary and President To Lam reaffirmed the principle that “homes are for living, not for business or asset accumulation,” while calling for stronger government oversight to ensure that all citizens have the opportunity to secure stable housing.

TOD as a housing solution

Linking this message to transit-oriented development (TOD), Giang Do, Head of Advisory and Valuation Services at Savills Vietnam, warned that if TOD simply drives up land prices around metro stations without appropriate regulatory measures, those who depend most on public transportation, including working- and middle-class residents, could be pushed away from areas with the best infrastructure. This is a challenge that many major cities around the world have already faced. The success of a TOD project should not be measured by rising land values, but by its ability to give different groups of residents access to housing, jobs, and amenities within a sustainable urban environment.

According to Giang Do, for TOD to truly help people secure housing, three key pillars must be implemented together: planning, financial mechanisms, and land management.

From a planning perspective, the traditional approach of dividing land into separate functional zones must be replaced. Instead, the prime 300-to-500-meter area around transit stations, roughly a five-to-ten-minute walk, should be developed as high-density, mixed-use urban communities. Social housing and affordable housing should be integrated directly into these areas. International urban planning experts have identified a “1-3-6” formula for TOD projects: one-part ultra-luxury housing, three parts premium housing, and six parts affordable and social housing. This ratio should be established as a core principle from the planning approval stage rather than being left entirely to market forces.

Beyond planning, financial mechanisms are key to making TOD viable. If authorities simply require developers to build social housing without offering incentives, private sector participation may decline. Flexible tools such as floor area ratio bonuses, which allow developers to increase building height and floor space in exchange for commitments to provide affordable and rental housing, should be widely applied. At the same time, land value capture mechanisms should be used to ensure that the significant gains generated by transportation infrastructure do not flow solely to speculators, but are reinvested in housing development funds and housing support programs. In terms of land management, auctions of prime land around metro stations should include strict requirements for social housing and public spaces. Public-private partnership models can also be used flexibly, with the government contributing cleared land as capital.

Dinh Minh Tuan, Southern Regional Director of Batdongsan.com.vn, believed the principle that “homes are for living” marks a turning point that could fundamentally reshape the real estate market. The market will be pushed in three key directions: away from speculation and toward real housing value; toward making social and affordable housing a development priority; and toward tighter controls on short-term speculative capital flows to prevent abnormal land price spikes.

Industry experts have also called for stronger regulatory measures, including delaying the implementation of new land price frameworks until reliable market data is available, introducing floor and ceiling prices for land auctions to prevent price manipulation, and applying progressive taxes to address idle land holdings. Over the long term, a transparent national land database is considered essential.

To ensure that TOD serves as a tool for expanding housing opportunities rather than simply driving up land prices, there are encouraging signs that Vietnam’s legal framework is gradually adapting to these new approaches. Resolution 98 for Ho Chi Minh City, the revised Capital Law, and National Assembly Resolution 188 on urban railway development have laid the groundwork for developing land around transit stations, promoting compact urban growth, and using TOD as a key solution to meet the housing needs of millions of urban residents over the next two decades.