Government falters in rescuing housing market DTiNews

The Ministry of Construction and enterprises have held many meetings to find a solution to rescuing the failing housing market in the last two months, but no real solutions have been found.

Many discussions yield little in terms of results

Reducing prices, splitting the large apartments into small ones, reducing taxes and using funds from the State budget to buy commercial housing to convert them into public housing were some of the main proposals given at various meetings and seminars held recently on the issue.

The Ministry of Construction has asked the Ministry of Finance to research and implement these potential solutions, such as a 50% reduction of VAT for homes smaller than 70 sq.m and cheaper than VND15 million (USD720) per sq.m.

The Vietnam Association of Financial Investors also sent the Prime Minister their proposals; giving preferential lending interests rates of 7% to people who buy homes for VND2 billion or less.

Two other proposed solutions were to build resettlement areas from commercial projects and to reduce the deposit interest rate for foreign currency to 1% or 0% per year.

Reports from the Bank for Investment and Development of Vietnam suggested the establishment a new company to deal with the problem of empty homes, forming new sector for low-income people and also a way to find additional capital for the real estate market.

Many said that the Government has been slow in carrying the needed plans.

“The Minister of Construction mentioned mini-apartments in June but regulations concerning them only came out in November. Splitting large apartments into smaller ones has been mentioned many times, but there have been no real regulations issued yet.” a company said.

Several experts disagree with the idea of using State funds to buy commercial property and turn into public housing because it will put a serious strain on the State budget.

“How will this be paid for? Who will the Government sell or rent the homes to? People who have to live in resettlement areas will not have enough money. The Government can’t use those houses as headquarters because it would mean throwing out a lot of money and get nothing in return,” economist Le Dang Doanh said.

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