Improving the offer and providing transparent information on real estate projects are the most important solutions to help prevent speculation.
The Ministry of Finance (MOF) has been gathering views on its idea to impose a land tax on property which aims to prevent speculation and reduce prices, thereby giving people more opportunities to own homes .
However, contrary to forecasts, experts and the public do not applaud the idea. They believe that taxation will not help achieve the goals desired by the MOF, but will make the situation worse, while the opportunities to buy houses will become smaller.
What does the market need?
Experts believe that keeping transparent information about real estate, from development and planning to laws, will help avoid price inflation and market disruptions. However, the publication of real estate projects must be done in many localities.
Nguyen Van Dinh, chairman of the Vietnam Realtors Association (VRA), said that after local authorities issued warnings about artificial land fever and released information on land use plans , the price of land has fallen.
“In some localities such as Hoa Binh, land prices were inflated because prices there were still considered reasonable, but are expected to increase in the future,” Dinh said.
“The abnormal increases in real estate prices recently are blamed on many parties, including unclear information, which makes it difficult to assess the real value of real estate,” he commented.
Dang Hung Vo, former vice minister of natural resources and environment, said transparency and control of information play an important role in stabilizing property prices. However, he recommended that in order to make the information transparent, the state should have a database with up-to-date information on the real estate market from the local to the central level.
According to the Ministry of Construction (MOC), house and land prices have steadily increased over the past year. At the end of 2021, the price of apartments had increased by 5 to 7% on average. Meanwhile, prices for detached houses in the projects have increased by 15-20% and land prices by 20-30% compared to the end of 2020.
The main reason for the price increase was the shortage. Other reasons include rising input costs, including rising prices for labor and building materials.
Nguyen Quoc Anh, a respected real estate expert, said that to stabilize prices, it is necessary to improve supply. To improve supply, it is necessary to remove legal bottlenecks.
Stressing the need to improve supply, Anh said that imposing a property tax on real estate would lower prices, but only in the short term.
“Prices would go down for a short time because people would have to listen to the news. Meanwhile, prices would rise in the medium to long term,” he said, adding that this could be seen in some markets such as Singapore and Malaysia.
He said abundant supply would create healthy competition. In a market with healthy competition, prices would be reasonable, thus giving people more opportunities to own a home.
According to Le Hoang Chau, chairman of the HCM City Real Estate Association (HOREA), housing supply in HCM City has dropped sharply due to legal issues. Current laws state that only real estate agents developing projects on 100% residential land will be recognized as project investors.
“The settlement has made it impossible to implement hundreds of commercial housing projects across the country over the past five years,” Chau said.
He warned that it would be a problem if Vietnam imposed a land tax on real estate while maintaining the collection of land use fees, which means new taxes will pile up on top of existing ones.
HOREA proposed a standard process for the development of commercial housing projects to define the time of each procedure and shorten the time of administrative procedures.
The association also proposed that the government modify and supplement decree 100 soon to perfect the device and the policy for the development of social housing, attract more companies and use the land reserves reserved for the development of social housing.
In order to have more affordable apartments, Chau said comprehensive measures are needed, including cuts in bank loan interest rates, VAT (value added tax) and tax. corporate tax (corporate income tax) to attract more investors.
Finance Department’s property tax bill sparks controversy
While some people support the Ministry of Finance (MOF) plan to tax houses, others warn that taxation is not feasible and could have the opposite effect.
Finance Ministry proposes tax policy to prevent land speculation
Prime Minister Pham Minh Chinh has instructed the Ministry of Finance (MOF) to study and design certain types of property market-related taxes, including property tax, to stabilize the market and reduce speculation.