Cracking down on real estate speculation after “violent, brutal” auctions

As usual, when the real estate market begins to show signs of recovery, concerns about speculation and land price inflation through the hands of speculative investors increase.

The recent "explosive, brutal" land auctions and the practice of setting sky-high auction prices and then "running away" and abandoning the deposit in some areas of Hanoi once again demonstrate the tricks of speculative investors, "buy now, sell now".

Swing traders - who are considered masters of sniffing out information - when they hear about a new infrastructure project, a land auction, or even rumors or draft policy news, they are ready to fly to the hot spot, buy immediately if they like it, without hesitation and without the concept of waiting. And when the wave comes, they also sell immediately to make a profit. They are more reckless than anyone else, even if they don't have enough money, they are willing to borrow to "go to war".

However, it is the swing traders who are the ones who start many real estate fevers. It is probably not too much to say that the swing traders, who currently dominate the market, are also the ones who stir up and cause the market to have a fever.

The land market, by its very nature, is a product that is easy to speculate on and has high potential for price increases. However, the daily and weekly price increases make not only the management agencies but also cautious investors apprehensive. That is why the Ministry of Construction recently had to send a dispatch to localities requesting control over the buying and selling of real estate that has been exchanged many times, especially in areas, projects, and apartment complexes with unusual price increases.

The Ministry of Construction commented that the development of the real estate market still has many potential risks. The situation of spreading rumors, real estate speculation, abnormally high housing prices in some areas and land auctions with bids many times higher than the starting price in localities are still complicated, causing market disruption, affecting the overall socio-economic development.

As one of the units that regularly monitors the real estate market situation, in a recently released newsletter, the Vietnam Association of Realtors (VARS) said that the legal system still does not have a mechanism or policy to identify, control, and effectively prevent speculative activities, land hoarding, price inflation, and deposit skimming by individual investors.

Accordingly, the concepts of speculation and investment in Vietnam are still not clearly defined. Buying land for living, renting or transferring is legal and is an activity that goes hand in hand with the market mechanism on the basis of self-responsibility for profits and losses, but uncontrolled buying, selling and transferring activities are the main cause of land fever occurring in many localities across the country.

It is also necessary to add that although the management agency has begun to take stronger actions in the face of the hot developments in the apartment segment, the document is still administrative in nature and has not solved the root cause, because currently, in the land sector, there are no regulations defining what is speculation and real estate price manipulation. Therefore, once again, the issue continues to be raised that there should be early regulations on real estate taxation to put land into use and bring this product back to its true value.

Thus, to regulate the market to develop in a safe, healthy, sustainable direction, so that land prices increase and decrease according to the real needs of the market, the issuance of real estate tax policies is an urgent task. Here, effective and transparent real estate taxation, targeting those who accumulate and speculate, instead of those who buy real estate for the purpose of living or organizing production and business, will both help increase budget revenue and help regulate the real estate market.

The drastic intervention of state management agencies to rectify and control the situation of land price speculators will partly reduce risks for genuine investors, but most importantly, it must eliminate the motives of wave-makers.

Thus, tax policy will limit or eliminate the motivation for people to speculate, restraining the increase in real estate prices, because along with interest costs and other opportunity costs, owning speculative real estate will become riskier. At that time, the activity of buying and selling real estate to profit from the difference, or creating virtual supply and demand to inflate real estate prices will gradually become meaningless.

Source: https://baodautu.vn/batdongsan/dep-loan-luot-song-nha-dat-sau-nhung-phien-dau-gia-bao-phat-bao-tan-d225164.html