Without taxes on second properties, few Gen Z-ers can afford houses

January 17, 2024 | 03:00 pm PT
Young people will never own a home if wealthy people keep hoarding houses, then leaving them deserted until prices increase.

The ratio of house price to income in Vietnam is so excessively high that there is an urgent need for policies to tax second and subsequent properties.

Houses left unoccupied or unrented should be subject to fines or increased taxes to reduce individual land ownership rates, decrease the economy's dependence on real estate, and stimulate other industries.

Furthermore, real estate transactions also require some regulations. It is important to adjust the tax rate depending on how long the property has remained unused before being sold. It should be compulsory to disclose the history of transactions, including prices and dates, for properties on the market to ensure every buyer has access to this information.

Although I am actively investing in houses and land, I support taxing second properties. Owners of multiple properties should bear the burden of gradually increasing taxes as leaving properties unused merely to wait for value appreciation does not benefit the economy. If anyone wants to buy a second house or plot, they should be prepared to pay a reasonable amount of tax for it.

I believe it is crucial to implement this tax as soon as possible, ideally within the next one or two years.

No one wants an economy that is heavily reliant on real estate. Currently, the absence of taxes on second properties discourages owners from reducing rental prices as such actions would lower the value of their assets.

We aspire for Vietnam to develop like the U.S., Japan, South Korea, and Taiwan, yet we are reluctant to impose taxes on second properties as these nations do, which is paradoxical.

In these nations, additional taxes are imposed on secondary properties while deserted houses incur monthly fines. Learning from their experience in drafting tax policies is crucial for Vietnam to avoid the middle-income trap, a situation where middle-income countries get stuck at an income level and are unable to transition to a high-income economy.

Concerns that taxing second properties will inflate housing prices overlook the fact that developed countries successfully manage real estate markets without prices rising to exorbitant levels that are observed in Vietnam.

In reality, taxing second and subsequent properties helps curb speculation. Implementing a rental price ceiling based on area-specific per-square-meter rates, with penalties for exceeding these limits, is a feasible solution to prevent price hikes.

Addressing these challenges requires a willingness to explore and implement effective strategies.

Gen Z-ers in Vietnam are on the verge of being engulfed in the middle-income trap. Without measures to cool down the real estate market, young graduates will struggle to earn even a VND20 million ($815) monthly salary, let alone consider buying a house.

Advising them to buy cheaper land in rural areas is not a feasible solution as job opportunities are limited in such areas, and land prices there are no longer as cheap as people think. Research shows that Vietnamese need to work for 57 years to afford a house without assistance from their family, which is highly unreasonable.

Therefore, I believe imposing taxes on second real estate properties is essential to reduce the economy's reliance on real estate. While property owners with multiple assets might oppose this, the prevalent conservative mindset of viewing land as a passive income source is a barrier to national development.

In conclusion, implementing tax measures to prevent speculation and shift the economy’s focus away from real estate while simultaneously pivoting towards high-technology manufacturing, is imperative. An economy excessively concentrated on property trading is a warning sign of potential instability.

Like developed countries, Vietnam should not anchor its economy in real estate. Real estate will still be important but its economic prominence needs to be reduced to stimulate production and goods consumption.

What are your thoughts on this matter?

Reader CG

*This opinion was translated into English by AI. Readers’ views are personal and do not necessarily match VnExpress’ viewpoints.

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