Vietnamese economic experts are proposing the implementation of a tax on second homes to mitigate real estate speculation, address housing affordability issues, and generate sustainable revenue for infrastructure development. While the proposal aims to stabilize the housing market, it has sparked debate over its potential impact on ordinary homeowners and the broader economy.
At a recent policy dialogue on economic growth, Associate Professor Dr. Phạm Thế Anh from the National Economics University suggested that Vietnam should consider taxing second homes. He argued that such a tax could discourage property hoarding and speculative investments, which have been contributing to inflated real estate prices and widening wealth disparities. By increasing the cost of owning multiple properties, the tax could incentivize owners to utilize these assets more effectively, such as by renting them out or selling, thereby increasing housing supply and stabilizing prices.
The proposal comes amid concerns over Vietnam’s rapidly rising property prices, which have made homeownership increasingly unattainable for many citizens. In the first quarter of the year, transactions involving apartments, private houses, and land plots increased by 16-32% compared to the previous quarter, with prices continuing to climb. Deputy Prime Minister Trần Hồng Hà acknowledged that Vietnam’s real estate price growth ranks among the highest globally, exacerbating housing accessibility issues.
Proponents of the tax argue that it could serve as a sustainable revenue source for local governments, funding essential infrastructure projects like parks, roads, hospitals, and schools. Additionally, it could allow for reductions in other taxes, such as corporate and personal income taxes, which currently burden production and consumption.
However, the proposal has sparked debate. Critics caution that a blanket tax on second homes could inadvertently penalize families who purchase additional properties for legitimate purposes, such as providing housing for their children. They suggest that the tax should consider factors like property value and usage rather than simply the number of properties owned.
Implementing such a tax would require careful consideration of various factors, including establishing clear criteria to distinguish between speculative investments and legitimate property ownership. Lessons from other countries, such as Singapore and the UK, which have implemented similar taxes, could provide valuable insights.
As Vietnam strives to become a high-income country by 2045, addressing real estate speculation and ensuring housing affordability remain critical challenges. The proposed tax on second homes represents one potential tool to promote a more equitable and sustainable housing market.