Vietnam drafts property tax law to curb prices
Thursday, 8 November 2007
Vietnam is drafting a real estate ownership tax law to curb skyrocketing property prices and speculation amid scenes of people queuing overnight to join lotteries for apartments, property dealers said
They said overall property prices have gone up about 50 percent since the beginning of the year, mainly because investors diverted money from the stock market into property. Speculation in land and equities in the emerging market economy is becoming a concern for policy makers and economists who want to avoid market bubbles and sustain Vietnam's high growth rates for years to come. "In some areas in Hanoi and Ho Chi Minh City (HCMC), especially in the luxury condominium sector, prices have tripled in the past year alone," Nguyen Xuan Dao, chief executive of property developer Vietnam Property Inc said. Dealers said most condominium projects in Hanoi and HCMC are sold out before they are even built.
Dao said a 150-sq.m condominium in Hanoi's Ciputra City, a development by Indonesian developer PT Ciputra Development Tbk, now sells for about US$240,000, compared with about $80,000 last summer.
This in a country where the GDP annual per capita income is about $835, although economists believe it is five or six times higher in Hanoi and HCMC. Property dealers said that according to the draft law, owners who have more than one home would be subject to annual real estate taxes.
The law would come into effect in 2010. Only transfer taxes are now levied on property sales and most transactions are paid in cash, making it difficult for authorities to track them and collect taxes on capital gains. Freehold Property dealers said that a government plan announced in July to allow Vietnamese living overseas and expatriates to own real estate on a freehold basis had also triggered speculators to buy more property for future re-sale.
"Most people buy to re-sell and the people who really need a place to live cannot afford the price," said Tran Du Lich, Director of HCMC Economic Institute. In HCMC, where most overseas Vietnamese from the US and Europe choose to resettle, prices have soared between 60 to 100 percent.
A square meter at luxury project The Lancaster in the heart of the business district jumped from about $3,000 last year to $4,200 this month.
Rents for luxury apartments are up by 20 percent to about $35-$38 per sq.m., property management firm CBRE Richard Ellis said. Last week hundreds of buyers camped overnight outside the sales office of Singapore's CapitaLand, to pay deposits for The Vista project on the Saigon River with prices starting at about $200,000 each.
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Reuters
They said overall property prices have gone up about 50 percent since the beginning of the year, mainly because investors diverted money from the stock market into property. Speculation in land and equities in the emerging market economy is becoming a concern for policy makers and economists who want to avoid market bubbles and sustain Vietnam's high growth rates for years to come. "In some areas in Hanoi and Ho Chi Minh City (HCMC), especially in the luxury condominium sector, prices have tripled in the past year alone," Nguyen Xuan Dao, chief executive of property developer Vietnam Property Inc said. Dealers said most condominium projects in Hanoi and HCMC are sold out before they are even built.
Dao said a 150-sq.m condominium in Hanoi's Ciputra City, a development by Indonesian developer PT Ciputra Development Tbk, now sells for about US$240,000, compared with about $80,000 last summer.
This in a country where the GDP annual per capita income is about $835, although economists believe it is five or six times higher in Hanoi and HCMC. Property dealers said that according to the draft law, owners who have more than one home would be subject to annual real estate taxes.
The law would come into effect in 2010. Only transfer taxes are now levied on property sales and most transactions are paid in cash, making it difficult for authorities to track them and collect taxes on capital gains. Freehold Property dealers said that a government plan announced in July to allow Vietnamese living overseas and expatriates to own real estate on a freehold basis had also triggered speculators to buy more property for future re-sale.
"Most people buy to re-sell and the people who really need a place to live cannot afford the price," said Tran Du Lich, Director of HCMC Economic Institute. In HCMC, where most overseas Vietnamese from the US and Europe choose to resettle, prices have soared between 60 to 100 percent.
A square meter at luxury project The Lancaster in the heart of the business district jumped from about $3,000 last year to $4,200 this month.
Rents for luxury apartments are up by 20 percent to about $35-$38 per sq.m., property management firm CBRE Richard Ellis said. Last week hundreds of buyers camped overnight outside the sales office of Singapore's CapitaLand, to pay deposits for The Vista project on the Saigon River with prices starting at about $200,000 each.
............
Reuters