"Land auction brokers" appear
The Ministry of Construction has just sent Report No. 5333 to the Government Office on analyzing the cost structure, selling price and causes of real estate price increase, and proposing solutions.
In addition to the benefits achieved, according to the Ministry, the auction of land use rights in recent times has revealed limitations and negative aspects. In the process of organizing land auctions in some places, there are also phenomena of "auction brokers", collusion... affecting auction participants.
"The phenomenon of bidding very high prices for some plots of land, then canceling deposits, creating virtual price levels to manipulate the market, buying and reselling many auctioned plots of land to make illegal profits is quite common in many places and is even organized," the Ministry of Construction said.
The ministry also pointed out some auctions in Hanoi with very high results, such as the land auction in Hoai Duc district with the winning bid 18 times higher than the starting price.
Auction of 68 land lots in Thanh Oai, Hanoi (Photo: Duong Tam).
According to the Ministry of Construction, there are three main reasons affecting the results of land auctions in recent times.
Firstly, the low starting price attracts many participants. Secondly, the deposit is low. Thirdly, in the auctions, there are many investment groups specializing in participating in auctions and then selling immediately to make a profit. Outside the auction area, many brokers are waiting for the results, ready to buy and sell auctioned land with a price difference of 200-500 million VND/lot.
The market was negatively affected when the winning price was many times higher than the starting price.
The result of the land auction being many times higher than the starting price will have a negative impact on the land and housing price level, on the housing and real estate market (supply and demand). Accordingly, this price will be used as reference information to determine the land price and then create a new price level that is even much higher for the area near the auction point.
This is beneficial for projects that have been allocated land and have paid land use fees, but is disadvantageous for projects that have been approved but have not paid land use fees.
The reason is that one of the methods to determine land prices is the direct comparison method through analyzing the prices of vacant land plots similar in terms of land use purpose, location, profitability, infrastructure conditions, area, shape, legality of land use rights transferred on the market, winning land use rights auctions to compare and determine the price of the land plot to be appraised.
In addition, the Ministry also assessed that winning land auctions at prices many times higher than the starting price also affects investors' psychology, leading to an increase in the prices of housing and real estate products that have been or are being offered for sale near the auction location.
Auction of 19 land lots in Hoai Duc, Hanoi (Photo: Duong Tam).
In fact, the winning price of land auction is often the base price for organizations and individuals to refer to and determine the purchase, sale and transfer price when transacting real estate.
"Increasing land prices will increase input costs and lead to an increase in housing and real estate prices. Businesses will have little opportunity to invest in affordable, low-cost projects and will be forced to invest in high-end, super-luxury real estate to serve very high-income earners in society in order to recover capital and do business effectively. This will cause more difficulties for people, especially low-income and middle-income earners, in creating housing," the Ministry of Construction analyzed.
Not only for the people, the high land price level will make it impossible for businesses and investors to have effective investment and business plans, leading to not attracting construction investment in the area and reducing and limiting future supply.
Land acquisition, compensation, support, and resettlement for projects using land for national defense, security, and socio-economic development purposes are also affected when the results of land auctions are unusually high. This can easily provoke people whose land has been acquired and have received or have not received compensation to complain and demand a higher level than the approved plan, causing social instability.
The Ministry of Construction proposes to study and perfect regulations related to land auctions to ensure they are consistent with the practical situation, in the direction of increasing deposits, determining starting land prices to closely match the actual situation of the area, shortening the time to pay the winning bid, and limiting auction participants for speculative purposes...
Source: https://dantri.com.vn/bat-dong-san/bo-xay-dung-xuat-hien-co-dau-gia-dat-tao-gia-ao-de-thao-tung-thi-truong-20240924142519070.htm
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