Vietnam Introduces Tax Policies to Combat Real Estate Speculation
HANOI: Vietnam plans to introduce tax policies to discourage speculation in a housing market that has been hit by soaring prices, according to state media reports. Investment in real estate is very popular in Communist-run Vietnam, where capital controls limit overseas investment. The sector has recently been boosted by rapid government-backed growth in bank lending.
The influx of capital into the real estate sector has encouraged speculation, with houses changing hands within months and remaining vacant for long periods. Entire neighborhoods in big cities have also stayed empty long after construction was completed.
Speaking at a government meeting on housing policy, Prime Minister Pham Minh Chinh called for measures to cool prices for homes, particularly apartments, as reported by state broadcaster VTV. Chinh emphasized that housing is an essential need and equal access for all citizens must be ensured. The report did not provide a specific timeframe for the introduction of new measures.
In September, Chinh called for the construction of more houses to cool soaring real estate prices. The new appeal comes days before the start of a five-yearly congress of the ruling Communist Party, which will decide the leadership for the next decade.
Affordability concerns are rising as house prices soar. According to the construction ministry, apartment prices in Vietnam rose by 20%-30% last year, while land plot prices increased by 20%-25%. In big cities, prices last year rose to an average of 100 million dong ($3,804) per square meter, according to industry data. The average annual salary of Vietnamese workers is around 100 million dong, according to government data.
Chinh also called on the finance ministry to ensure there was enough funding for a social housing program that aims to build up to one million apartments for low-income earners by 2030. Developers have recently focused on building high-end accommodation.
A Hanoi-based real estate broker, who declined to be named to speak more freely in a country where the state tightly controls public debate, commented, 'I think it will be very difficult to get rid of speculation in the real estate market. People with money still choose to invest in homes as a safe investment channel, while any strong measures to crack down on speculation would ultimately hurt property developers, which play an important role in the economy.'
Vietnam's central bank announced over the weekend that it aimed to slow credit growth this year, while tightening controls over loans to risky sectors, including real estate. Shares of real estate companies on the local stock market fell 2.6% on Wednesday morning, with the largest property developer Vinhomes falling 5.2% and Kinhbac City down 0.6%.
