A proposal that the government should subsidize the housing market to enable its recovery has been rejected by economists who say the industry should help itself rather than burden the government.
The proposal, made by the Vietnam Association of Financial Investors (VAFI) to the prime minister, central bank governor, and the construction and finance ministers, envisages the government providing US$384 million to subsidize loans for buying low-cost and mid-range homes, according to news website thesaigontimes.vn.
Buyers can get loans at 7 percent interest in the first three years.
The group offered a second option for local governments to buy up houses since prices have fallen by at least 30 percent. The VAFI estimated it would cost $1.2 billion to buy 25,000 houses, and said in the proposal that the sovereign fund, the State Capital Investment Corp., can fund part of the buying.
Ho Chi Minh City and Hanoi have a combined 35,000 unsold houses that could take at least seven years to be sold, the news website said, citing a report by Dragon Capital Group.
Nguyen Dinh Cung, deputy head of the Central Institute for Economic Management, said the government cannot come to the rescue of the property market since tax collections are dwindling.
To use public funds to rescue the industry will create "resentment" among people, he said.
The government has posted a huge budget deficit of $6 billion as of the end of October.
Tran Dinh Thien, head of the Vietnam Economic Institute, said the economic situation has been worsening since 2009 when the real estate market began to decline.
Property companies need to save themselves by cutting prices further instead of seeking a bailout from the government, he said.
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