'Need to restructure the real estate market towards reducing the high-end segment'

Delegate Tran Van Khai said that regulating the real estate market in the direction of reducing high-end housing and increasing social housing will limit consequences and help the market develop healthily.

Commenting on the draft Law on Real Estate Business (amended) on the afternoon of June 23, delegate Tran Van Khai (Standing member of the Committee for Science , Technology and Environment) assessed that the State's policy to regulate the market is still thin and not at the right level.

Through contact with voters, Mr. Khai said that people want the revised bill to eliminate the mindset that "there is no business more profitable than land business" and help the next generation not to be hopeless in their dream of owning a house to live in.

Accordingly, delegates recommended that the drafting agency review and ensure long-term stability of the policy; create development momentum through open policies; restructure towards reducing the number of high-end houses and increasing social housing and housing for workers.

Standing member of the Committee for Science, Technology and Environment Tran Van Khai. Photo: National Assembly Media — Standing member of the Committee for Science, Technology and Environment Tran Van Khai. Photo: *National Assembly Media*

To avoid speculation and market imbalance, Mr. Khai cited success in Singapore. According to him, this country imposes progressive real estate taxes, buying a second home requires paying 7% of the property value, 10% for a third home. If buying and selling real estate in the first year of purchase, the tax must be 16% and gradually reduced to 0% after 4 years. The more real estate people buy, the lower the loan amount. For example, buying a first home requires a loan of 80%, the second home only 60%. After applying the above policies for a few years, real estate prices in Singapore have been controlled and decreased in all segments.

Discussing in the previous group, Chairman of the Economic Committee Vu Hong Thanh also acknowledged that the regulation of the real estate market is unbalanced. "The segment of several hundred million per square meter is redundant, the proportion of construction without people living in it is very high, but housing for low-income people is very little," he said.

This shortcoming was also warned by experts last year. Accordingly, the Ho Chi Minh City housing market in the second half of 2022 will enter a period of challenged liquidity when the supply of high-priced houses increases while the type of housing in high demand in the affordable segment has no products.

Mr. Vo Huynh Tuan Kiet, Director of CBRE Vietnam's housing department, said that last year, the apartment supply was at 22,000-24,000 units, of which the first two quarters accounted for 50% of this supply, the rest was launched in the last 6 months of the year. However, this basket of products did not include affordable housing, causing the market to fall into a situation of scarcity and shortage of low-cost housing at the end of the year.

Mr. Kiet also confirmed that many investors have plans to launch luxury and super luxury apartments on the market, which could lead to the establishment of a new price level with higher price columns in the future.

At today’s Law consultation session, delegate Pham Duc An (Chairman of the Board of Members of the Vietnam Bank for Agriculture and Rural Development) said that the current fluctuations in real estate prices have a huge impact on socio-economic development. Rising housing and land prices make it impossible for low-income people to rent or buy, making the investment environment less attractive.

Agreeing that market rules must be respected, Mr. An said that the draft needs to have regulations to control real estate prices and specify the responsibility and proactiveness of the management agency, instead of "waiting until something happens to regulate the market".

Delegate Dieu Huynh Sang (Deputy Head of Binh Phuoc Delegation). Photo: National Assembly Media — Delegate Dieu Huynh Sang (Deputy Head of Binh Phuoc Delegation). Photo: *National Assembly Media*

Delegate Dieu Huynh Sang also said that ensuring the real estate market develops healthily is an important condition for the smooth operation of related markets such as capital, credit, and currency.

She proposed that the draft supplement a mechanism to synchronize the real estate information system with land information and urban development; market development must take into account planning and reasonable land use plans, balance supply and demand and create a suitable real estate price level, overcome speculation; and increase the use of cashless real estate transactions.

According to Chairman of the Economic Committee Vu Hong Thanh, the regulations in the draft are "still not stable" because they do not provide solutions to resolve the imbalance in the housing segment and do not have effective measures to regulate the market. He said that regulation must start from planning, clearly defining where is high-end real estate, where is social housing and needs a clear implementation plan.

Along with planning, Mr. Thanh said there needs to be policies to create support mechanisms for businesses, encouraging businesses to invest in the housing and real estate segments that the market is lacking.

It is expected that the draft Law on Real Estate Business (amended) will be considered and approved by the National Assembly at the 6th session, at the end of 2023.

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