Cures weighed for housing woes

Minister of Construction Trinh Dinh Dung told the meeting the real estate troubles were illustrated by  the abundance of unsold housing units, estimated at more than 40,000 units nationwide, and the collapse of home prices by 50 per cent from their peak, down to a level roughly equal to that of 2006.

He said increasing the liquidity of the large volume of unsold units must be prioritised in the real estate market recovering strategies.

“Solving problem of thousands of unsold condominiums, villas and houses will need more coordination from concerned bodies, especially from banks and local authorities,” said Dung.

National Assembly deputy Do Van Duong said a prolonged treatment might be necessary while the economy remained in a weak health.

Among the proposal Dung advanced is to split apartments in order to make properties more affordable.

However, some participants expressed concerns that splitting large apartments into smaller, lower-priced units could result in the creation of slums, contrary to the goal of building a modern society that the government has proposed.

Dung countered that this scenerio would not happen because those apartments will be still kept in high quality and served by good infrastructure.

The minister emphasised that many developed countries still had very small apartment units, even if only 10-15 square metres but very modern, civilised, to meet the needs in urban centres.

Last month the Ministry of Construction listed a series of proposals to ease the difficulties facing the real-estate sector, including slashing taxes for both home investors and buyers.

Accordingly, businesses and investors in the social housing sector would enjoy a corporate income tax of 10 percent, instead of the current 25 per cent.

Meanwhile, the value-added tax slapped on social home buyers should be slashed from 10 percent to 5 percent to encourage purchases, the ministry said. The VAT cut will also help investors reduce the selling prices of their projects.

The ministry also suggested cutting 50 per cent of the VAT tax for social housing investors, and this would alse be applicable to apartments with less than 70 square meters of living space and sold at less than VND15 million per square meter.

According to the Ministry of Construction, under the initial survey from 50 cities and provinces, up to January 2013, more than 42,250 apartments and houses, 92,800 square metres of office for lease, 98,400 square metres of trading centre have not been sold or leased.