Vietnam Real Estate Market Development Strategy

Together with economic development, the property market has made robust development steps in all segments, with incremental prices. The strong development of the property market has led to the development of other economic sectors. Gradually improved social infrastructure meets the higher and more diversified demand of urbanisation in the country. Good infrastructure systems in industrial zones and export processing zones are attracting more domestic and foreign manufacturing investors, which are making important contributions to industrial growth, raising export value, and boosting economic health.

 

The development of the property market has facilitated market-based pricing and trading methods, which exert a pull on domestic and foreign investors and strengthen the competitiveness of enterprises. The force of property business firms, designers and builders was formulated and developed. Most importantly, the real estate market has generated positive impacts on the development of other economic sectors, such as construction materials and home decoration, created jobs for labourers, increased incomes of the State Budget. In the 2006 - 2011 period, land-related revenue accounted for over 10 percent of total revenue of the State Budget and helped economic restructuring towards industrialisation and modernisation.

 

However, the real estate market has posed inadequacies, weaknesses, unhealthy and unstable development, characterised by sometimes-overheating and sometimes-freezing stages and unplanned development. Lots of projects have been delayed or abandoned. Rising inventories have badly affected the macroeconomic stability and social security. Property prices, especially housing prices, are unstable and overvalued. Lack of transparency is seen from planning, investor selection and project handover stages to transaction stage. “Give and take” regime in real estate project designation leads to corruption and implicit transactions result in price speculation and market cornering.

 

These shortcomings are resulted from incomplete, overlapped regulatory systems in market development, construction investment, transaction, project operation and management. A lot of real-life problems and policy inadequacies are yet to be amended, supplemented to better support the property market.

 

Based on construction and development objectives towards uniformity, stability and sustainability, Vietnam needs to perfect State real estate management apparatus from central to grassroots levels; ensure the appropriate market-based supply of property goods to the market at stable prices and good quality; issue and amend legal documents on investment, land and housing to create a synchronous legal basis for a stable market development; mobilise domestic and foreign resources for market development, the expansion of other production sectors and the national economic growth.

 

State revenue from land and real estate (including land use tax, land-use right transfer duties, property transfer tax, land use fees, land rents, and land registration fees) reaches 10 - 15 percent of the total State revenue. The mechanism for intermediary organisations that support the market like real estate transaction floors, real estate investment funds and housing savings funds needs to be perfected.

 

Regarding solutions, Vietnam needs to complete the regulatory system and enhance the effectiveness and efficiency of State management so as to promote and manage the development stability and sustainability of real estate market; strengthen the role of State management in land resource use to control and regulate the sustainable development of real estate market; restructure and develop diverse types of real estate, especially housing, to suit the needs of the market; adjust property-related credit, tax, fee and charge policies to increase the flexibility of capital flows for market entities and prevent speculation and tax evasion. At the same time, the country needs to build synchronous, reliable market information and forecasting systems from central to local levels to lay the groundwork for policy planning and market management; and provide information and ensure the transparent, public and professional operation of the market.