Besides, violations in real estate business are happening with more complex and sophisticated trends, and especially real estate prices are continuously increasing every quarter and every year.
The problem of speculation and market manipulation
Recently, in many localities, especially large cities such as Hanoi, Da Nang, Ho Chi Minh City, "ghost" urban areas or thousands of hectares of large and small housing projects abandoned, lying "covered" for decades have become familiar images. This is a systematic form of speculation with the aim of waiting for the right time to make super profits, which not only causes waste of land resources, but is also one of the direct causes of the rapid increase in real estate prices.
According to market research data from the Vietnam Real Estate Association, in the third quarter of 2024, the prices of real estate products continued to increase sharply. Specifically, the land segment recorded an average increase of about 3.5% in the primary market; similarly, low-rise housing increased by 5 - 10%; especially the apartment segment has established a new level when prices increased by an average of 24% and the total new supply decreased by about 20% compared to the previous quarter. In the Hanoi, Da Nang and Ho Chi Minh City markets alone, the corresponding year-on-year increases were 64%, 30.6% and 46.2%, respectively.
Along with the problem of land speculation and land acquisition, there is a sign of taking advantage of land use right auctions to manipulate the market. This is the biggest limitation of land use right auctions besides the financial benefits for the State budget. In many localities, "auction brokers" have colluded to pay dozens of times higher than the starting price, creating a "virtual price" to buy and resell auctioned land lots or to liquidate neighboring land lots that were previously purchased at low prices.
As a result, after setting an unusually high price, in order to achieve the goal of quick liquidity and profit, the "auction brokers" are naturally willing to forfeit the deposit, because the deposit is only about 10 - 20% of the total value of the land plot calculated according to the starting price given by the organizing unit, and this price is often lower than the actual market price in that area.
This not only directly affects the interests of auction participants, but also negatively impacts the real estate market, when this virtual price is required to be used as a reference for compensation and site clearance for new housing projects...
“In the third quarter of 2024, the real estate market has recorded a positive recovery, but it is not as vibrant as before the Covid-19 pandemic; new supply is still limited, while real estate prices are still high. We see a number of reasons leading to this situation, such as: people's demand for housing and business is high, while supply is low, demand is greater than supply; input costs of real estate projects (construction materials, land use fees, etc.) are all increasing. In particular, many areas have signs of price increases and price inflation to manipulate the market through land use rights auctions" - Deputy Minister of Construction Nguyen Viet Hung informed.
Strong action against projects "hugging" abandoned land
Lessons from the "underground waves" of speculation and manipulation of real estate prices have left many consequences for the real estate market, causing virtual land fevers that make it impossible for people with real needs (for housing, production and business...) to access land. If they want to, they have to pay a large sum of money for speculation, leading to abandoned land; and businesses developing new projects are worried about not being able to guarantee profits due to increased investment and land costs; the poor have to pay more and more money and gradually lose the ability to own a house.
It is worrying that resources for investment in production, business, job creation and surplus value for society are "buried" in land; speculative land that is not put into use does not stimulate the growth of related industries and in the long term, when the supply is accumulated for a long time, it will lead to bad debt of investors in the banking system and at a certain point will cause inflation for the entire economy.
“State management agencies and local authorities need to take strong action against projects that “hold” land for speculative purposes, but have been abandoned for many years without being put into exploitation and use through specific consideration and assessment of subjective and objective causes. For projects with sufficient capacity to implement, a mechanism should be created to continue implementation. On the contrary, the Penal Code also clearly stipulates the handling of acts of manipulating, inflating, and pushing up prices in real estate business. These must be strictly implemented to promptly correct violations,” said Dr. Nguyen Van Dinh, Vice President of the Vietnam Real Estate Association.
According to economic expert Associate Professor Dr. Dinh Trong Thinh, to stabilize real estate prices and limit rapid and sudden increases, the most important thing is to prevent speculation and price inflation. Accordingly, competent authorities need to take more drastic measures to control and bring selling prices back to the actual market value for real estate transactions, including land use rights auctions.
“Countries around the world have been very successful in controlling real estate prices, according to actual market value, through decrees on real estate taxes. About 20 years ago, the Party Central Committee issued a Resolution on real estate tax reform, but to date, this policy has not been implemented.
Therefore, we need to build a separate tax decree for the real estate market, to implement it in a stable and long-term manner; accordingly, abandoned real estate, properties that are sold many times or own many real estate properties must be taxed highly, even up to a level equal to the rent for the land area and construction area that is currently available" - Associate Professor, Dr. Dinh Trong Thinh said.
In addition, experts believe that legal issues are also one of the major causes leading to the stagnation of the real estate market. The Prime Minister's Special Working Group on reviewing and removing difficulties for the real estate market has resolved a large amount of work (over 800 out of 1,200 stuck projects have had their difficulties resolved).
In particular, from August 1, 2024, when the revised and supplemented laws officially take effect with many new regulations expected to soon remove legal obstacles, the management agency needs to speed up the issuance of sub-law documents and implementation instructions to help speed up project progress, increase supply to the market; at the same time, focus on prioritizing social housing projects and low-cost commercial housing to serve the needs of the majority of people, ensuring the effectiveness of social security policies.
The most important issue at present is still the regulatory role of the State, through mechanisms, policies, management tools and sanctions to reduce and prevent speculation, bringing the real estate market back to a state of balance in the long term.
The recently amended and supplemented legal system has come into effect, but it is still necessary to continue to receive comments and contributions; to summarize and draw lessons and continue to amend outstanding issues, in which to increase supply and stabilize selling prices, it is necessary to thoroughly resolve the issue of approving investment policies, at the same time approving investors using land.
Vice President of Hanoi Real Estate Club Nguyen The Diep
Source: https://kinhtedothi.vn/can-xu-ly-nghiem-hanh-vi-dau-co-thao-tung-gia-nha-dat.html
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