Will house prices fall when a second property tax is imposed?

In the cases of South Korea and Singapore, the tax has failed to stem rising house prices. In China, the policy is still being carefully considered.

Real estate is still being speculated and prices are increasing "exponentially"

In a report sent to the Government Office , the Ministry of Construction has requested the Ministry of Finance to jointly study and propose tax policies for individuals who own multiple houses/lands; and at the same time tax abandoned and unused real estate. The Ministry hopes that this will be a policy that will help limit speculation and "surfing", which disrupt the market.

Previously, many experts also proposed a second real estate tax to "cool down" housing prices. However, reality has shown that many countries, despite applying this policy, have still failed to curb real estate prices.

For example, in South Korea, the country has already imposed high taxes on individuals who own three or more homes and those who own two homes in central areas. However, despite such strong tax policies, "sharks" in South Korea still own a large amount of real estate in the country.

Many young people in South Korea have given up their dream of buying a home in Seoul. Photo: Pexels

According to the country's Ministry of Land, during the period 2018 - 2023, there were about 7,996 real estate properties owned by just 30 super-rich people. The total value of the above assets is more than 897 million USD. Notably, 24/30 people on the list mainly bought houses in Seoul, Incheon and Kyunggi Province - places with the highest housing demand in the kimchi land.

Commenting on the figures, Min Hong-chul, a member of the opposition Democratic Party (DPK), bluntly stated that the government 's anti-real estate speculation policies have not been effective.

In another development, according to the announcement of the Korean Trade Union, the young generation in this country is extremely struggling to buy a house. Statistics show that workers in their 20s need to save money for about 86 years to be able to buy an apartment in Seoul.

In Singapore, in April 2023, the island nation decided to double the tax on foreign home buyers from 30% to 60%. Meanwhile, Singapore citizens will be subject to a 20% tax rate when buying a second home, up from the previous rate of 17%.

However, according to Reuters, house prices in Singapore in the first 6 months of 2023 continued to increase "hotly", despite the general downward trend of the global market. Even social housing in this country has increased rapidly and almost reached the threshold of 1 million USD/unit.

Be careful when taxing second properties

In China, the country of a billion people has not yet applied a second nationwide real estate tax policy. This stems from concerns about the possible negative impacts on the real estate market, causing instability in the financial market and the economy . Even with the current difficult situation, China is trying to loosen home buying conditions to stimulate the market.

For Vietnam, many people expected a second real estate tax to appear in the 2024 Land Law. However, this provision did not arrive in time for the final law. However, Mr. Tran Khanh Quang, General Director of Viet An Hoa Real Estate Investment Company, said that this is not negative news.

“We have not yet assessed the impact of the second real estate tax on the market. Even if it is applied, real estate prices may continue to increase or vice versa. Therefore, if we make a hasty decision, we will fall into a situation of ‘haste makes waste’. This will be an issue that requires more time to test and analyze,” Mr. Quang shared with reporters of Dau Tu Newspaper.

According to the Vietnam Association of Realtors, imposing a second real estate tax could reduce demand, leading to other long-term consequences for the economy. If not careful, legal loopholes could even form. For example, people who own multiple properties can evade taxes by having relatives register them on their behalf, or landlords can increase rents to offset the costs of paying taxes…

Source: https://baodautu.vn/batdongsan/lieu-gia-nha-co-giam-khi-danh-thue-bat-dong-san-thu-hai-d225886.html