Brian Jeffrey
A parliamentary oversight team has urged that research be completed quickly and proposed changes to tax regulations, calling for increased tax rates on large landholdings, multiple properties, and for land that is not being used or is kept unused.
The monitoring group from the National Assembly recently delivered a comprehensive report to lawmakers concerning their review of “Policies and regulations for real estate market oversight and social housing development from 2015 to late 2023.”
Between 2015 and 2021, the real estate market thrived, offering a wide variety of properties including condotels and resort villas. Nonetheless, the team remarked on “irregularities” within the market structure, indicating a mismatch between supply and demand, primarily favoring high-end properties aimed at investors, while there were few options available for the majority of the population.
By 2022-2023, the real estate sector experienced a downturn, with many businesses facing challenges due to issues that resurfaced from previous years amidst the fallout from the COVID-19 pandemic. During this time, the available property inventory significantly diminished compared to earlier periods, with prices soaring beyond the wage growth of most individuals.
In Hanoi and Ho Chi Minh City, affordable housing options have virtually disappeared.
Statistics indicate a widening disparity in the real estate sector. The Hanoi People’s Committee reported that mid-range and luxury apartments are prevalent in the market. In 2022, while apartment prices increased significantly, transaction rates dropped to about 10% of available units, and high individual house prices saw minimal transactions.
In Ho Chi Minh City, property transactions fell sharply, with prices rising uncontrollably, signaling a disconnection between actual value and asking prices. The local Real Estate Association noted that since 2021, there have been no affordable apartments (costing less than VND 25 million per square meter) in the market.
Simultaneously, several housing initiatives are experiencing delays and halted progress, resulting in considerable wastage of land and investment, thus raising costs for developers.
The report pointed out that the market suffers from imbalances, being overloaded with high-end, large, and costly properties, while there is a lack of social and affordable housing options that cater to public needs.
Moreover, the average pricing of social housing remains excessively high for the targets it aims to serve.
“Management of social housing initiatives continues to show considerable weaknesses. State budget allocations for favorable loans for social housing are minimal, and the application procedures through the Social Policy Bank are cumbersome and repetitive. The maximum loan amount for social beneficiaries is insufficient, not matching the current economic and social realities,” the report indicated.
Furthermore, the rollout of a VND 120 trillion credit initiative for social housing, worker accommodations, and the overhaul of old apartments has been sluggish, complicated by high interest rates and procedural hurdles, which hampers its capacity to entice developers and potential buyers.
For a longer-term perspective, the delegation recommended expediting research and proposing amendments to tax laws, introducing higher tax rates for those with large land areas, multiple properties, delayed land usage, or vacant land. Such initiatives are expected to support new land law reforms, improve land management practices, promote equitable income distribution, and secure stable funding for the national budget, consistent with global standards and Vietnam’s socio-economic context.
