Solutions to bring real estate prices back to their true value

Dr. Tran Xuan Luong - Deputy Director of the Vietnam Institute for Real Estate Market Research and Evaluation - commented that although the 2024 Land Law has come into effect, it has covered many areas and aspects of practice. However, there are still some shortcomings that have not gone into the practical issues and realities of people's lives. That is, there are still many gaps and loopholes in determining land prices, land data collection processes, land valuation and land auction processes that need to be supplemented to make these things more objective, public and transparent.

To regulate land prices, the State needs to have many different measures to deal with the problem of "supply - demand" balance. Accordingly, it is necessary to cool down the "supply - demand" of housing by both internal and external forces.

Regarding fiscal policy, the State needs to study the correct and targeted taxation, and at the same time issue regulations on the collection of valuation data and the construction of land price lists close to the actual market prices.

In addition, regarding monetary policy, interest rates also need to be separated between subjects. In the case of enterprises developing social housing, interest rates are more preferential, possibly reduced by 3-5% or shortened administrative procedures for investment and construction licensing. As for those who borrow money to buy social housing, similar and appropriate policies are also needed.

Along with that, in the case of people who already have a house but still want to buy more land for investment, there also need to be separate policies and separate interest rates.

Dr. Tran Xuan Luong said that in order to prevent speculation and land price inflation through auctions, additional measures are needed, such as establishing an independent Land Auction Supervision Council, and applying and establishing additional policies on ceiling and floor prices. In case the floor and ceiling prices exceed the threshold, the auction will be canceled.

"There needs to be additional administrative regulations such as publicizing the purpose of purchase. If it is for living, it is necessary to provide declaration documents in the auction file such as proof of work, house construction plan, living plan, proof of source of funds to prevent money laundering. State management agencies need to issue more appropriate policies and decrees, closer to reality, only then can the real estate market stabilize" - Mr. Luong said.

Mr. Nguyen Van Dinh - Chairman of the Vietnam Real Estate Brokers Association - said that in order for land prices to increase and decrease in accordance with the market, issuing a real estate tax policy is an urgent task that cannot be ignored because it is difficult.

Effective and transparent real estate taxation, targeting those who accumulate and speculate instead of those who buy real estate for living purposes or business production, will both help increase budget revenue and regulate the market. Accordingly, the tax should be applied to second homes and above. It is natural that people with many assets, assets that continuously generate profits, will pay more taxes. In fact, most home buyers in the past were second and third home buyers.

This tax policy will limit or eliminate the incentive for people to speculate, curbing the increase in real estate prices, because with interest costs and other opportunity costs, owning speculative real estate becomes riskier. Buying and selling real estate to make a profit, or creating virtual supply and demand to inflate housing prices, will gradually become meaningless. At the same time, it will encourage owners to rent out or sell "abandoned" real estate, thereby increasing housing access for people with real housing needs.