Tax, transparency important to bring housing prices to appropriate levels

Imposing asset taxes and improving market transparency would help bring skyrocketing housing prices in Viet Nam to appropriate levels, experts have said.

 

The market has not had a balance between supply and demand for many years, according to Nguyen Manh Ha, Deputy President of the Viet Nam Real Estate Association. There was also a severe shortage of housing supply in major cities nationwide.

Ha pointed out that affordable homes at prices of below VND25 million (US$1,120) per sq.m had nearly disappeared from the market in HCM City while in Ha Noi, this segment accounted for just about 10 per cent.

Thus, housing prices were becoming unaffordable for a majority of citizens, he said.

For example, a new housing price level was set in just a short period of time in HCM City, he said, adding that affordable projects become mid-end and mid-end become high-end. The problem was that this was simply an increase in price, not in quality, which might easily cause a market bubble, he added.

According to Tran Dinh Thien, former Director of the Viet Nam Economics Institute, it was necessary to have appropriate tax policies to bring housing prices to the appropriate level.

A tax to prevent speculation of real estate assets would be helpful, Thien said, adding that appropriate tax policies would be an effective tool to prevent speculators from pushing up housing prices.

Thien said called for improving market transparency from all parties, including management agencies, planning makers and project developers, to lower housing prices.

Market transparency was very important, which would enable home buyers to easily get access to accurate and adequate project information.

Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, said transparency played an important role in stabilising housing prices. Vo said it was necessary to develop an information system about the real estate market to improve transparency.

Nguyen Thi Thanh Huong, general director of Dai Phuc Land, said housing prices would decrease when there was an excess of supply over demand.

In recent years, many projects faced legal problems, especially in HCM City, which caused a shortage of supply and pushed up housing prices.

Huong said policies to encourage the development of projects were needed to improve supply which would help cool housing prices.

Policies to tackle existing legal problems in housing projects must be employed, Huong said, adding that the Government should also devise policies to promote the development of social housing projects and affordable homes.

“Boosting supply will lower prices,” Huong stressed.

Nguyen Van Dinh, deputy general secretary of the Viet Nam Association of Realtors, said it was necessary to apply technology in construction to lower costs together with the simplification of investment procedures to shorten the investment progress.

Another important factor was lowering borrowing costs, Dinh said.

According to the Ministry of Construction, about 75-80 per cent of housing demand was for homes at a price of below VND25 million per sq.m.

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