sanctions not deterrent enough?

The distortion and deviation of land auction activities are causing public discontent and it is believed that competent management agencies need to intervene and take "stronger action" to thoroughly resolve this problem...

Regarding land auctions, in recent days the real estate market has witnessed record winning prices for land auctions in suburban districts of Hanoi.

Typically, the auction lasted 19 hours, ending at 4:30 am on August 20, 19 plots of land in Tien Yen commune, Hoai Duc district, Hanoi were successfully sold, the highest lot won at 133.3 million VND/m2, about 30 times higher than the starting price. Besides the above land lot, 11 other lots were also set at prices above 100 million VND/m2. The two plots with the lowest winning price in this session were 91.3 million VND/m2, still 12.5 times higher than the starting price.

This result is considered very unusual because according to data from Batdongsan.com, the common selling price of land in Tien Yen commune in the second quarter of 2024 was only 43 million VND/m2. In addition, the selling price in neighboring communes in Hoai Duc district also fluctuated from 22 to 62 million VND/m2, in the second quarter of 2024.

Previously, on August 10, an auction of 68 plots of land was also held in Ngo Ba area, Thanh Than village, Thanh Cao commune, Thanh Oai district, Hanoi. After the auction ended, the plot with the highest winning price was over 100 million VND/m2, 8 times higher than the starting price. The regular plots also had winning prices from 63 - 80 million VND/m2, 5 to 6.4 times higher than the starting price.

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

The two land auctions with exceptionally high prices mentioned above not only attracted public attention, but also reminded people of the "unprecedented" auction at Thu Thiem Urban Area, Ho Chi Minh City at the end of 2021.

Specifically, on December 10, 2021, Ngoi Sao Viet Real Estate Investment Company Limited (a subsidiary of Tan Hoang Minh Group) won the auction of a land plot with an area of ​​over 10,000m2 in Thu Thiem for VND 24,500 billion, creating an unprecedented record with a price of VND 2.4 billion/m2 of land, 8 times higher than the starting price, causing a stir in the real estate market for a long time.

It can be seen that the auctions in Hoai Duc, Thanh Oai and Thu Thiem, although different in terms of location, time, starting price, etc., all have one thing in common: the winning bid price is many times higher than the average. Land prices far exceeding the real value not only cause difficulties in asset valuation for subsequent auctions at the auction location, but also have widespread effects in many places across the country.

From this reality, public opinion suspects that there is a “manipulation” by speculators and land brokers to create liquidity for the surrounding areas that are “hibernating”. This land auction does not represent the common price on the market and can become a tool for speculators to push up land prices. This behavior risks negatively impacting the Government’s efforts to reduce housing prices, ensure social security, and even cause the entire economy to stagnate due to the psychology of waiting for high-priced land sales.

The distortion and deviation in land auction activities have been causing public discontent. Many opinions say that competent management agencies need to quickly intervene and promptly rectify the land use rights auction work, thereby strictly handling the act of taking advantage of auctions to disrupt the real estate market for the purpose of profiteering.

As a professional real estate investor, Mr. Le Minh Trung (living in Cau Giay district, Hanoi) said that recently he has followed many land auctions and asked himself who is behind and inflating real estate prices in those auctions? Because after non-transparent land auctions, only a few people benefit, the rest of the investors, including brokers, suffer losses.

"The reality is that the attractiveness of real estate profits is so great that in just the morning of the auction, the profit is equal to the total income of several years of ordinary workers, so investors still rush in regardless" - Mr. Trung said and emphasized that to thoroughly handle the behavior of land auctions for speculation and price hikes, we cannot rely on the self-awareness of investors, but depend a lot on the determination of state management agencies.

Similarly, Ms. Tran Kim Nga (residing in Go Vap District, Ho Chi Minh City), who has experienced both gains and losses during the real estate bubble burst, also believes that to survive, investors must fight on their own, but to make the real estate market transparent, the State's management role is irreplaceable.

“Instead of chasing after virtual fevers, meaning waiting for the virtual fever to flare up before announcing and recommending, local authorities should be transparent about planning and projects from the beginning. Once transparent, no broker or speculator can spread rumors to cause chaos and instability in the real estate market anymore,” said Ms. Nga.

On the business side, Mr. Tran Khanh Quang - General Director of Viet An Hoa Real Estate Company affirmed that real estate businesses do not benefit from real estate fever because it takes several years to invest in a project from the time of planning to launch until completing legal procedures for opening for sale. Land fever in other places and projects that have not yet been compensated can cause businesses to be affected.

Meanwhile, economic expert Phan Dung Khanh analyzed that real estate is inherently a channel for selective customers because it requires a large and very large amount of capital, so the image of people lining up from morning to night to close lots, close land, transfer, receive deposits... is just a pre-made scenario, not only causing individuals to fall into traps and lose money but also pushing the market to the risk of freezing because real estate prices have been pushed to unimaginable levels.

“With land auctions, in the short term, it is possible to increase the deposit level, charge fees for land lots transferred early after the auction, etc., but in the long term, to be a sufficient deterrent, a universal, comprehensive solution that can be considered for implementation is to prosecute criminal responsibility for manipulation,” Mr. Khanh emphasized.

Sharing the same view, lawyer Le Thu Thao - Ho Chi Minh City Bar Association also commented that the act of manipulating the real estate market is very dangerous but the establishment of sanctions is not enough of a deterrent.

According to lawyer Le Thu Thao, currently, Vietnamese law has provisions on the crime of “Stock Market Manipulation”, clearly indicating signs of market manipulation and disruption as a basis for handling criminal liability for violations. Therefore, with the act of disrupting the real estate market, causing dangerous consequences for society, it is also possible to consider criminalizing this act.

“In my opinion, it is necessary to research and develop a new crime in the Criminal Code related to the act of manipulating the real estate market for personal gain. Absolutely do not let public opinion gossip, wonder and worry about land auctions suspected of being “inflated”, which will reduce people’s trust in the authorities and reduce the seriousness in enforcing the law,” Lawyer Thao suggested.

09:28 September 18, 2024

Source: https://kinhtedothi.vn/dau-gia-dat-de-dau-co-day-gia-che-tai-chua-du-ran-de.html