Ministry of Construction: Housing prices will increase by 15 - 20% due to the impact of land price list
According to the Ministry of Construction, while the cost of borrowing, sales, taxes, etc. has remained almost unchanged, the cost of land has been increasing continuously. This increase may even continue when the annual land price list is applied.
In a report on real estate prices sent to the Government Office, the Ministry of Construction stated that when applying the 2024 land price list, land use costs for real estate projects will increase compared to before. This will directly cause housing prices to increase by about 15-20%.
Specifically, according to the Ministry of Construction, land costs account for 7-20% of the total implementation cost of a high-rise apartment project. Even for villa and townhouse projects, this rate is up to 25-50%. On the other hand, compensation costs for assets on land often account for a not too large proportion of construction investment costs, only about 2%.
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| New apartment projects in Hanoi's inner city are almost no longer priced below VND50 million/m2. Photo: Thanh Vu |
Citing actual evidence, the Ministry said that at the residential area of the investor GP Invest, the land use fee calculated on the selling price of 1m2 of apartment after applying the new land price list will increase to 22 million VND/36 million VND (accounting for about 60%). Currently, this rate is about 42%, equivalent to 15 million VND/36 million VND.
This trend is also happening at the Chanh My urban villa project (Binh Duong), from 16.3% to about 50%. Similarly, the Thanh Lam - Dai Thinh 2 project (Hanoi) also has land use fees increasing from 15% to 33% of the selling price.
While land prices continue to skyrocket, other costs such as construction investment costs, loan costs, sales, taxes, etc. are assessed by the Ministry of Construction as "less volatile". Loan costs have even decreased because interest rates have gradually "cooled down".
In the 2024 Land Law, the land price framework, which is updated every five years, has been replaced by an annual land price list. Speaking to Dau Tu Newspaper reporters, Mr. Pham Duc Toan, CEO of EZ Property, said that the new land price list will certainly increase the real estate price level and this trend will occur in many different segments.
Mr. Toan cited that, at the time of applying the 5-year land price list (2020 - 2024 period), in the first year of implementation, localities carried out valuation work very close to market prices, thereby helping the amount of money paid to the budget increase sharply. However, this caused many types of real estate to increase in cost, especially residential land. In some localities, land use tax in 2022 even increased 2 - 3 times compared to 2018.
According to Mr. Tran Khanh Quang, General Director of Viet An Hoa Real Estate Investment Company, the removal of the land price framework is a landmark decision by legislators in the 2024 Land Law. Now, both local authorities and businesses will have to do more work to have clean land. On the other hand, people will benefit when they are compensated for land at market prices.
“Market supply may be limited in the first 1-2 years, because businesses will need time to adapt and meet legal regulations. However, if viewed positively, with pressure from compensation costs for site clearance, investors will have to plan long-term strategies in the future, instead of 'living short-term' as before,” Mr. Quang commented.
Source: https://baodautu.vn/batdongsan/bo-xay-dung-gia-nha-se-tang-15---20-do-anh-huong-cua-bang-gia-dat-d225762.html
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