If the housing supply is not improved, the imposition of high taxes or tightening bank credit for owners of more than one real estate property will not help stop real estate speculation. On the contrary, experts warn that it will cause housing prices to continue to rise.

The Ministry of Construction has recently proposed that a tax be imposed on owners ofmore than one property in an effort to prevent speculation. The Ministry of Finance said it supports the proposal and will study it further.

The proposal was raised because real estate prices have been increasing dramatically since the beginning of this year.

Meanwhile, the Vietnam Association of Realtors (VARS) has recently proposed tightening bank credit for speculators to prevent real estate price bubbles. To reduce the number of people borrowing bank capital for speculative purposes or using excessive leverage, VARS suggested that credit institutions lower lending caps and require a higher ratio of equity payments, or apply higher interest rates to owners ofmore than one real estate property.

In addition, VARS said, the Government can impose regulations on credit quality control, requiring banks to report more details on real estate-related loans to help strengthen risk monitoring.

However, given the current limited real estate supply, experts recommend caution in imposing high taxes, raising interest rates or tightening credit for real estate.

Expert Dr Đinh Trọng Thịnh said that when housing supply is scarce, buyers are willing to accept high taxes and interest rates because they expect the purchase will bring them profit. When demand exceeds supply, imposing more taxes and higher interest rates will only drive real estate prices higher.

In the same vein, Dr Lê Xuân Nghĩa, a member of the National Financial and Monetary Policy Advisory Council, said the most fundamental solution at this time is to increase housing supply. There are currently thousands of real estate projects under suspension in Hà Nội. If there are solutions to promptly resolve legal hindrances and clear administrative procedures, the projects will be implemented to increase the supply to the market and cool down housing prices.

Nghĩa said that the Government must have a long-term housing finance strategy, especially for social housing. The social housing and low-cost housing segments in Việt Nam have nearly failed so far, while the price of commercial housing has increased rapidly.

To develop the social housing and low-cost housing segments, it is necessary not only to have an open mechanism for enterprises to develop social housing, but also to have preferential financial policies for home buyers. In Việt Nam, previously, the VNĐ120 trillion real estate lending package failed because it was not attractive enough for borrowers due to high interest rates and short preferential periods.

BIDV’s chief economist Dr Cấn Văn Lực proposed that management agencies promptly implement the Land, Housing and Real Estate Business laws to increase supply, and ensure measures are in place to regulate and intervene promptly when the market heats up.

In particular, Lực noted that agencies must promptly remove obstacles in land valuation, land auctions, legal procedures and bad debt settlement with real estate as collateral to help the real estate market develop sustainably. — VNS