|
Slow growth, stable prices predicted for property market
Former Deputy Minister of Natural Resources Dang Hung Vo predicts there will be a shortage of capital and little growth in the real estate market this year, in an interview with Tien Phong (Vanguard) newspaper.
Do you think the real estate market will remain constrained by limited access to capital?
The health of the property market is dependent on the State's credit policy. It came to a standstill when credit flows were prevented from pouring into the sector. The market bounced back when part of the Government's stimulus packages was disbursed last year.
It can be seen that this year's real estate market has not yet shown any signs of growth due to capital shortages. Noticeably, the economy is now affected by increasing prices of essential commodities and imports, forcing the State to give priority to curbing inflation. For this reason, commercial banks will cut down on the supply of funds for the real estate market.
Whether the real estate market is hot or cold, people who want to buy a house still have trouble finding one. Why is this the case?
This can be attributed to a lack of effective regulation by the state. The transparency of the real estate market remains very low, according to findings of some domestic and international orga-nisations. The problem is compounded by unreasonable tax schemes and land prices which have pushed real estate prices to extremely high levels. But research has shown that the price of land for house developers are far lower than retail market prices, even when investors have to pay land use tax and compensation for people who previously occupied the land. As a result low-income earners experience difficulty buying houses.
The State has issued a series of laws on real estate control. The Land Law has also been amended several times. But still the situation persists whereby people who want to buy houses cannot buy them at the original prices set by investors.
The root of the problem is that housing projects are not made public. If this was done, people would know how many apartments have already been sold. For example, recently there were some real estate projects advertised for sale in Ha Noi although at the time of sale the land where they were to be built had still not been transferred to the developers.
The second issue that I already mentioned is the need to fix land prices and tax schemes early to conform with market demand. These are key measures needed to solve the problem.
How can the tax scheme be used to fight speculation?
The current tax rate of 0.03 percent is not high enough to fight speculation.
The tax scheme needs to be designed in a way so people cannot engage in speculation. We should not tax those who have only one apartment but we should heavily tax those who have idle houses.
It is not uncommon to see completed real estate projects with three quarters of their apartments uninhabited after investors announced all of them had been sold. But in reality, they were being sold to agents and brokers. The final prices for consumers are thus much higher than the original prices set by investors.
vietnamnews
|
