Target Speculators, Not Buyers: Rethinking Policy on Second-Home Loans to Protect Genuine HomeSeekers

Vietnam Grapples with Real Estate Speculation as Housing Costs Surge

Hanoi and Ho Chi Minh City – concerns are mounting in Vietnam as real estate prices continue their upward trajectory, fueled by speculation and a critical shortage of affordable housing. Industry leaders are urging the government to implement stringent measures to curb speculative investment and ensure housing remains accessible to the nation’s citizens.

Need for Controlled intervention

Nguyen Vu Cao, chairman of khang Land Board, has emphasized the necessity of controlling real estate prices, but cautioned against broad-stroke policies. He stated that restricting loans for second homes, a proposal currently under consideration by the Ministry of Construction (MOC), requires careful deliberation. While limiting loans could curb speculation, a uniform approach could stifle markets that require stimulation, not restriction.

“Policies should be technically designed to target actual speculators,” Cao explained. “If not, liquidity will drop, and businesses will suffer.”

Regional Disparities Demand Tailored Solutions

Le Dinh Chung,CEO of SGO Homes,pointed out the uneven nature of the market. While prices are soaring in major metropolitan areas like Hanoi and Ho Chi Minh City, many other regions remain relatively stable. Resort real estate, he noted, is particularly vulnerable, and blanket credit tightening could impede its recovery.

“policies should be region- and target-specific,” Chung asserted. “Applying a nationwide policy based solely on the conditions in Hanoi and Ho Chi Minh City would be illogical.” He further added that restricting credit could hinder Hanoi’s urban development plans, specifically efforts to relocate residents to new satellite cities.

Supply Shortages at the Root of the Problem

Experts agree that the fundamental issue lies in the severe lack of supply, particularly in the affordable housing segment.Second-quarter reports indicate that high-end apartments constitute over 60% of the current housing supply, with affordable options scarce and largely confined to limited social housing projects.

Vietnam Housing Supply Breakdown (Q2 2025)

Housing Type	Percentage of Total Supply
High-end Apartments	60%
Affordable Housing	< 1%
Mid-Range Housing	39%

chung stated that credit tightening alone will not lower prices, emphasizing that increasing the supply of both social and commercial housing is the core solution. He suggested incentivizing developers to participate in the affordable commercial housing segment, bridging the gap between social housing and higher-priced options.

“In Hanoi, suitable housing could be priced at VND50-60 million per square meter, offering a step up from social housing at VND20-30 million per square meter,” Chung explained.

Protecting Affordable Housing from Speculation

Cao from Khang Land stressed the importance of preventing wealthy individuals from capitalizing on the affordable housing market for speculative purposes. He argued that these properties should be reserved for low-income buyers, shielding them from being flipped for profit.

Nguyen The Diep, vice president of the Hanoi Real Estate Club, proposed the creation of a national housing fund and a “pre-order” mechanism, where the government contracts developers to build projects meeting specific quality standards. This, he believes, could rapidly increase the supply of affordable units within three years.

Diep also highlighted the need to streamline the project approval process,citing that trillions of VND are currently tied up in stalled developments. Unblocking these projects, he argued, would unlock a significant amount of potential supply and naturally drive down prices.

understanding real Estate Speculation

Real estate speculation occurs when investors purchase properties with the expectation that their value will increase rapidly,allowing them to sell for a profit,rather than for occupancy or use. this can artificially inflate prices, making housing unaffordable for ordinary citizens. this issue isn’t unique to Vietnam; cities like Toronto and Vancouver have struggled with similar issues in recent years, prompting similar discussions about interventionist policies. According to a report by the International Monetary Fund, rapid urbanization and loose lending standards often exacerbate speculative bubbles in emerging markets.

frequently Asked Questions about Vietnam’s Housing Market

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Hong Khanh

How can policies differentiate between genuine vacation homeowners and short-term rental investors to avoid penalizing legitimate needs?

The Growing Problem of Second-Home Ownership & Housing Affordability

The dream of homeownership is increasingly out of reach for many,and a significant contributor to this crisis is the surge in second-home purchases – often driven not by genuine housing needs,but by real estate speculation and investment. While individual property rights are important,the current system often inadvertently favors investors and speculators,squeezing out first-time homebuyers and exacerbating housing shortages. This isn’t about punishing homeowners; it’s about leveling the playing field and prioritizing those seeking a primary residence. The focus needs to shift from restricting buyers to targeting the financial incentives that fuel speculative investment in second homes.

Understanding the Different Types of Second-Home Buyers

not all second-home buyers are the same. Categorizing them is crucial for effective policy:

* Vacation Homeowners: Individuals or families genuinely seeking a recreational property for personal use.

* Short-Term Rental investors: Those purchasing properties specifically to list on platforms like Airbnb and VRBO, prioritizing income generation. This is a key driver of housing market inflation.

* Long-Term Rental Investors: Buyers acquiring properties to rent out on a longer-term basis, contributing to rental market dynamics.

* Speculators: Individuals or entities purchasing properties with the sole intention of reselling them for a profit, frequently enough without any intention of occupying or renting them.This is where the most damaging impact on housing affordability lies.

Why Current Policies Often Miss the Mark

Many existing policies aimed at curbing housing speculation inadvertently penalize legitimate homebuyers. Blanket restrictions on loan amounts or increased down payment requirements affect everyone, regardless of their intent. These measures can:

* disadvantage First-Time Buyers: Making it even harder for those trying to enter the market.

* Limit Geographic Mobility: Restricting people’s ability to move for work or family reasons.

* Fail to Address the Root Cause: Not specifically targeting the speculative investment driving up prices.

Proposed Policy Shifts: targeting Speculation

The solution isn’t to make it harder to buy a* home, but harder to *speculate with homes. Here’s how:

* Higher Interest Rates on Second-Home Loans: Implement substantially higher interest rates for loans used to purchase properties intended as second homes, especially those not intended for primary occupancy. This increases the cost of speculation.

* Increased Property Taxes on Non-Primary Residences: Substantially increase property taxes on second homes, discouraging holding properties vacant for investment purposes. This generates revenue that can be reinvested in affordable housing initiatives.

* Stricter Loan-to-Value (LTV) Ratios: Require significantly higher down payments (e.g., 30-50%) for second-home loans, reducing leverage and risk for lenders.

* “Vacancy Taxes”: Implement taxes on properties left vacant for extended periods,incentivizing owners to rent them out or sell them.

* Enhanced Scrutiny of Loan Applications: Lenders should be required to verify the intended use of the property and assess the borrower’s financial capacity to cover costs without relying on rental income. This combats mortgage fraud.

* Data Openness: Improve data collection and reporting on second-home ownership and short-term rentals to better understand market trends and inform policy decisions.

The Role of Short-Term Rental Regulations

The rise of platforms like Airbnb has fueled the demand for second homes, turning residential properties into de facto hotels. Effective regulation of short-term rentals is crucial:

* Licensing Requirements: Mandate licensing for all short-term rental properties, ensuring compliance with safety and zoning regulations.

* Occupancy Limits: Restrict the number of days a property can be rented out annually.

* Local enforcement: Empower local authorities to enforce regulations and penalize violations.

* Revenue Sharing: Require short-term rental platforms to share data with local governments and remit taxes collected from rentals.

Benefits of a Speculation-Focused Approach

Targeting speculators offers several key benefits:

* Increased housing Affordability: By reducing demand from investors, prices become more accessible to genuine homebuyers.

* stabilized Housing Markets: Less speculation leads to more stable and sustainable housing markets.

* Increased Housing Supply: Discouraging speculation can free up properties for owner-occupancy,increasing the available housing stock.

* Stronger Communities: Prioritizing residents over investors fosters stronger and more vibrant communities.

* Reduced Risk of Housing Bubbles: Dampening speculative activity reduces the risk of unsustainable housing bubbles.

Real-World Examples & Case Studies

Several cities and countries are already experimenting with policies to curb speculation. Vancouver,Canada,implemented a foreign buyers tax in 2016,which demonstrably cooled the real estate market and made housing more affordable for local residents. While controversial, the tax demonstrated the potential impact