UNIVERSITY OF ECONOMICS HO CHI MINH CITY
VIETNAM
VIETNAM – NETHERLANDS
PROGRAMME FOR MA IN DEVELOPMENT ECONOMICS
Determinants of Homeownership in Vietnam
A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS
ABSTRACT
Homeownership is considered as one of most essential needs for people living in the country. It reflects the quality of life through the dwelling condition. The pei’centage of households that own private houses is increasing yeai to year. Furtlieiarioie, Vietnam is a developing country that is targeting to a market-oriented economy. Consequently, the probability of homeownership is improved, as well. However, the rate of poor households is still rather high in Vietnam. This may leads to many difficulties in obtaining satisfaction from homeownership. It is found that the household characteristics such as income. Also, age and gender of the household heads are found to be significantly correlated its homeownership. However, iriarital status and education attainment of the head are insignificant. Other determinants are social-economic characteristics such as credit assistant program, immigration and employirient. The result is that, immigration and employment have significant effects on homeowner ship probability.
TABLE OF CONTENTS
ACKNOWLEDGEMEN
DECLARA
ABSTRA
PAGE
TABLE OF CONTENTS…………………………… …………………………..I×
LIST OF TABLES. vi
LIST OF BOXE ABBREVIATIONS AND GLOSSARIES…………… ………………………..×II
CHAPTER I: INTRODUCTION. 1
1.1 Problem statement. 1
1.2 Objective of study. 2
1.3 Research questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..,3
1.4 Research methodology …3
1.5 Stmctureofthesis 4
CHAPTER II: LITERATURE REVIEW. 5
2.1 Theoretical literature. . . . . . . . . . . . . . . . . . . . . . , . . . . . , 5
2. 1.1 Basic terms and concepts 5
2. 1.2 Assessment of economic theoietical approaches. 7
2.2 Empirical studies. 16
CHAPTER III: RESEARCH METHODOLOGY. 21
3.1 1 Analytical frameworl‹ 21
3. 1.1 Qualitative choice models for duiable goods 21
3. 1.2 Methods of homeownership research 22
3.1.3 Major determinants of homeownership 24
3.2 Research method. 29
3.2.1 Justification of models 29
3.2.2 Econometric model specification 30
CHAPTER IV: AN OVERVIEW OF HOMEOWNERSHIP AND HOUSING SECTOR IN VIETNAM. 35
4. 1 An overview of homeownership in Vietnam 35
4.2 Changing in housing policies 39
5.1 Data set . . . . . . . . . , 47
5.2 Logistic model of homeownership 49
5.3 Logistic regression results 50
5.4 Measurement of goodness-of-fit. 52
5.5 Result interpretation.
5.6 Summary. 56
CHAPTER VI: CONCLUSIONS AND POLICY IMPLICATIONS. 58
6.1 Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ….. . . , 58
6.2 Policy implications. . . . . ………………………………………………………………………. .,. 59
REFERENCES. 60
APPENDIX 65
CHAPTER I. INTRODUCTION
1.1 Problem statement
Vietnam is a transition economy that has changed from a centrally planned economy to a inar1‹et economy. Over last two decades, Vietnam has increasingly integrated into the larger world of economies. Particulaily, since joining the WTO in November 2006, Vietnam’s economy has gradually tightened with the global economy strongly. As a result, Vietnam’s economy has grown more than 7% per year and income per capita has quickly increased from US$ 220 in 1994 to US$ 1,024 in 2008 (U.S. Department of State 2009). Economic reform has also brought Vietnam into a new ei a of development, industrialization, modernization and urbanization. Together with development process, economic giowth and rapid population growth, there are appropriate 86 million people, of them 29.6% are living in cities. This places a particularly important role on the development of housing sector and it has become urgently important at nowadays (Mizuiio & Isliigami 1999).
1.1.1. Homeownership
In 1991 Vietnamese people are allowed to have the right of owning a house by an ordinance on housing. Therefore, homeownership is a wish of Vietnaiiiese people (Geertman 2003). In according with economic growth, hoirieownership has become a proper demand in the life for a household because it is related to financial benefits. As a result, homeownersliip increases the deiriogi apla y stability in comparison with house renters that often change their accom inodatiotis (Dietz & Haurin 2003). In “Urban Development and Housing Sector in Viet Nain” reseai. It implies that Vietnamese people would like to enhance their sense of being ownership of a house. This really plays an important role iii improving the quality of life for the citizens. In other words, homeowneiship is not only helping people have the stable accommodation.
1.2 Objective of study
The research objective is to examine determinants of homeownership of households in Vietnam by:
(i) Household characteristics: household income, household size and household assets; age, marital status, gender and level of educational attainment of the household head.
(ii) Socioeconomic characteristics: imiiiigration status; credit acccssibi lity and employment that implies the number of members wor1‹ing in a household.
The thesis aims to establish a conceptual model for estimating the probability of homeownership on the basis of household and socioeconomic characteristics. From results of estimating, policy recommendations are suggested.
The result can be useful for policy, They can base on the most signi ficant determinants of homeownership to make positive. Policies for improving homeowner ship probability of households in Vietnam.
1.3 Research questions
The study is to answer the following questions:
(i) How do household characteristics affect on homeownersliip pt obability of households in Vietnam?
(ii) How do socioeconomic characteristics affect on homeownership probability of households in Vietnam?
Specifically, the thesis aims to the following questions:
(i) Is the educational attainment level of the household head a main factor of
homeownership probability?
(ii) Does the employment really affect on homeowneiship probability?
(iii) Is the impact of immigration status significant on the lioiu eownei ship probability?
1.4 Research methodology and scope of research
In order to have the right answers for research questions, econometric model and descriptive statistic methods are used to examine the relationship between the homeownership probability and its determinants. Specifically, the thesis is based on a Logit model for estimating determinants of the homeownership probability of households and a descriptive statistics analysis about the situation of homeownership in Vietnam. Data come from a secondary source, taken from Vietnam Household Living Standards Survey 2006 that is abbreviated to VHLSS 2006. This suivey is carried out by the General Statistics Office of Vietnam, with the support of UNDP and World Ban.
1.4.1.scope of research
Following the introduction chapter, the thesis is continued with Chapter’ II in which the most relevant economic theories and empirical studies to lion eowiiei ship and its determinants are reviewed. An adaptation of economic theories and empirical studies to the homeownership model is analyzed. Chapter III justifies methodology that includes analytical framewor1‹ and research method. In Chapter IV, an overview of homeownership is analyzed on the basic of VHLSS 2006 and housing sector development in Vietnam is presented. Model i egiession by econona eti ic atial ysis and evaluates the results, including presentation of data set, logistic regression results and results interpretation are introduced in Chapter V. The last chapter is conclusions and policy implications.
This chapter is developed to present a relevant theories and empirical studies of this empirical wor1‹ and it is divided into two sections. The first section is to ieview of theories that lay the theoretical foundation for this wor1‹. It is organized into two parts. The first part includes the definition of tems and concepts related to the objects of the thesis such as home and homeownership. In addition, house is recognized as duiable goods that households, as units of analysis, would 1il‹e to own. The second part focuses on the assessment of economic theoretical approaches that provides a ieview of economic theories on human capital investment, the decision malting of a household on consumption, tenure choice decision and consumer theory for durable goods. Last, but not least, the macroeconomic vaiiables of employment and immigration. The second section analyzes empirical studies that can i ecognized, model and data used. Moreovei, the majoi findings from different empirical studies and the most significant.
2.1 Theoretical literature
2.1.1 Basic terms and concepts
The first is the definition of home and classification of home. In the context of the thesis, home is the physical structure in which a household is living. It could be a house or an apartment. But only house is researched because this is appropriate to Vietnam. Household Living Standard Survey 2006 by Vietnam General Office of Statistical that defines whether the household owns a house or not. In reality, there are many different types of houses with different benefits in terms of homeownership. However, some main types of houses that the thesis deals with are based on the definition of General Statistical Office (2007). These types of houses are designed for the survey by General Statistics Office that adapts to circumstances iii Vietnam.
