A manifestation of "land thirst" or just "virtual fever"?

On the night of August 19, early morning of August 20, 2024, the auction of 19 land plots in Tien Yen commune, Hoai Duc district ended with the land price "finalized" at 133 million VND/m2, 30 times higher than the starting price.

The auction of land lots located in the suburbs of Hanoi lasted for 18 hours, causing a stir on social networking sites with images of hundreds of investors lining up and bustling to register to participate in the auction.

Đấu giá đất vùng ven cả trăm triệu/m2: Biểu hiện — The land auction took place until nearly 4:00 a.m. on August 20, 2024 (Photo: Huu Thang).

The two plots of land with the lowest winning price at this auction were 91.3 million VND/m2, but this was still 12.5 times higher than the starting price.

This image is not too new because less than half a month ago, the "fire pan" of land auction in Thanh Oai also established a new price level for the suburban land segment.

The land auction held last weekend in Thanh Oai district, Hanoi attracted thousands of participants. The highest winning price was over 100 million VND/m2, 8 times higher than the initial starting price of only 8.6 million VND/m2 to 12.5 million VND/m2.

Accordingly, the total amount of money Thanh Oai district collected from the recent auction was 404.6 billion VND, the difference in starting price was 349 billion VND, about 8 times higher than the original starting price.

As for Hoai Duc, this district expects to collect more than 186 billion VND from the auction, more than 11 times higher than the starting price.

Suburban land market before auction, land for sale from 20-30 million VND/m2

According to the actual market survey of Nguoi Dua Tin and the summary report on some electronic trading floors such as Batdongsan.com.vn, in fact, the selling price of land in Thanh Cao commune (Thanh Oai district, Hanoi) has tended to increase in recent years.

However, the average land price in this locality has only increased by about 80% over the past 4 years - from the common level of 15 million VND/m2 in 2020 to 27 million VND/m2 in 2024, without the phenomenon of a sudden increase of several dozen times like the price at the above auction.

Thus, compared to the common selling price of 27 million VND/m2 in the second quarter of 2024, the winning auction price of 63 - 100 million VND/m2 for land lots in Thanh Cao commune in the auction on August 10, 2024 is 2.3 to 3.7 times higher.

In neighboring areas of Thanh Oai district, prices also fluctuate within the range of 20-30 million VND/m2.

For the Tien Yen, Hoai Duc, Hanoi area, the most popular selling price of the land segment in the second quarter of 2024 was only recorded at 43 million VND/m2 with a growth rate in the most recent year of about more than 48%.

However, the winning land price in the recent auction was still 2 to 3 times higher than the common price level.

For neighboring areas in Hoai Duc district, the price is only from 22 to 62 million VND/m2 in the second quarter of 2024.

Skyrocketing land prices are a manifestation of "thirst" in the market.

Sharing about the above situation, Mr. Nguyen Quoc Anh - Deputy General Director of Batdongsan.com.vn said that from the second quarter of 2025 onwards, land plots will start to enter the main trend of recovery. The current waves are only local in some areas.

Data from Batdongsan.com.vn also shows that the demand for land nationwide in the second quarter of 2024 increased by 33% compared to the first quarter of 2024.

However, the expert assessed that this was only a local improvement in some areas, especially the northern provinces. Hanoi witnessed a 75% increase in interest in land.

"In particular, the level of interest and price increase in the suburban areas of Hanoi is due to planning factors and auction activities," Mr. Quoc Anh said.

Specifically, in the first half of 2024, land in Dong Anh, Gia Lam, Hoai Duc, Thach That, and Quoc Oai recorded an increase in searches from 48% - 104%, leading to an increase in land prices in these suburban districts from 4% - 24% compared to the second half of 2023.

Mr. Nguyen Quoc Anh said that there are 3 main factors that greatly affect the land market, including the regional economy, or even more macro-economically, the national economy; infrastructure planning and population, and connectivity with other localities.

"In addition to traditional markets, in many new markets where infrastructure planning information is announced, prices commonly increase by 10-30%, and in some places land prices increase 2-3 times in a short time.

Currently, planning information is being released quite massively on a large scale, the whole country is like a large project being implemented with synchronous planning. This positive information is giving wings to the liquidity and price of the land segment," the expert analyzed.

However, Mr. Quoc Anh also emphasized that, based on infrastructure information, there are places where land prices increase based on demand and potential, but there are also places where prices increase due to rumors and can have a negative impact on the market.

From another perspective, Dr. Nguyen Van Dinh - Chairman of the Vietnam Association of Real Estate Brokers (VARS) said that land auctions receive the attention of many participants and the prices are pushed up dramatically, clearly showing people's "thirst" for land.

In recent years, the number of projects, land plots, and real estate products with "clean" legal documents is extremely scarce, coming to the market in very small amounts and can be said to be almost non-existent.

Therefore, the launch of a project with full legal status and managed by the state will attract great attention from investors, who are willing to pay huge amounts of money to "hold" the land.

Hidden risks from "hugging" land

Although he believes that the high land prices are partly due to the "thirst" of the market, Mr. Dinh also reminded investors to be careful because although it has become a hot spot, land transactions are still not really a segment with strong liquidity. Some areas are really hot, but there are also areas where price inflation appears with the intention of manipulating the market.

"It is entirely possible that investors collude to participate in auctions, thereby pushing land prices in neighboring areas closer to the new price level to make a profit. Not to mention that Hanoi is a key urban area with the characteristics of limited land and dense population, real estate supply is always not enough to meet demand, so it is entirely possible that investors take advantage of that psychology to make a profit.

Whether the land price is really that high or not, we need to care about whether the winning investors will actually make the payment in the future. The story of the auction without deposit in Thu Thiem is still there to give us a more realistic view of this land fever situation," Mr. Dinh said.

Commenting that the land auction results with such high prices will make the cost of site clearance for new projects more expensive, Mr. Nguyen Quoc Anh is also concerned that with the winning auction price being 2 to 3 times higher than the average, land owners in the surrounding area will have the mentality of pushing up the selling price of their land.

The sudden high land prices can also create a trend of land speculation, as many people rush to buy land in the hope of profiting from the continued increase in land prices.

However, this can cause money to stagnate in land, instead of being circulated in other economic activities.

According to the expert, after a difficult market period, the general psychology of real estate buyers and investors will be more cautious than before.

Therefore, he recommends that buyers and investors should research the market carefully and learn about price fluctuations through objective sources of information before deciding to spend money on any product.

Land auction in Thanh Oai is completely transparent and follows the correct procedure.

In response to conflicting information that the project implementation, determination of starting price and organization of the auction of land use rights for 68 plots of land in Ngo Ba area, Thanh Than village, Thanh Cao commune, Thanh Oai district on August 10 were not transparent, Thanh Oai district People's Committee has just sent a report to Hanoi People's Committee on the above issue.

The report stated that the auction was organized in accordance with the provisions of the 2024 Land Law; the 2016 Auction Law; and decisions of the Hanoi People's Committee related to the promulgation of regulations on auctions of land use rights to allocate land with land use fees or lease land in Hanoi.

The review showed that a total of 1,550 customers submitted registration documents to participate in the auction, corresponding to 4,201 documents. Of these, 1,439 customers were eligible to participate in the auction, corresponding to 3,923 documents.

Through checking and reviewing documents and current guidelines, Thanh Oai District People's Committee found that all stages of the implementation process were carried out and complied with the guidelines, ensuring objectivity, transparency, and compliance with legal regulations, with no land hoarding, price hikes, and profiteering through the recent auction in Thanh Cao commune.

Thanh Oai District People's Committee affirmed that the organization of project implementation, land acquisition, site clearance, infrastructure construction, determination of starting price and selection of auction organization; posting of documents and organization of land use rights auction were in accordance with the provisions of law; the auction was organized honestly, publicly, transparently, fairly and objectively.

Customers bid according to demand and market conditions. The auction takes place according to procedures, under the supervision of law enforcement agencies and the people.

Source: https://www.nguoiduatin.vn/dau-gia-dat-vung-ven-ca-tram-trieu-m2-bieu-hien-con-khat-dat-hay-chi-la-sot-ao-204240820122958289.htm