(CLO) Land auctions with signs of irregularities in both winning prices and the number of registration applications are still ongoing because speculative psychology and expectations of increasing real estate prices continue to be maintained.
Previously, in August, public opinion was constantly stirred up by land auctions in suburban districts of Hanoi such as Thanh Oai and Hoai Duc, with a large number of registrations, long auction times and soaring winning bids, dozens of times higher than the starting price. This trend and result continued in recent land auctions in Ha Dong and Thuong Tin.
Accordingly, on October 19, Ha Dong district successfully auctioned 27 plots of land in Phu Luong, Yen Nghia, and Duong Noi wards. Notably, after 14 rounds, the customer who won the highest bid was determined to be 262 million VND/m2, 8 times higher than the starting price; the lowest winning price was also 5.8 times higher, reaching 133 million VND/m2.
Land auction in Ha Dong took place on October 19. (Photo: VV)
On October 22, in Thuong Tin, after 16 hours of fierce auction, 19/40 plots of land belonging to the Technical Infrastructure Project of the auctioned land in Van Diem commune, Thuong Tin district, Hanoi were also successfully auctioned with the highest winning price at 52.864 million VND/m2; the lowest price was 24.384 million VND/m2 with a starting price of 3.864 million VND/m2. The remaining 21 plots of land were not successfully auctioned because the auction participants violated the regulations.
Sky-high land auction prices followed by deposit cancellations are becoming 'commonplace'
The Vietnam Association of Realtors (VARs) said that despite the involvement of authorities, in the end, the auctions have not changed, and even the auctioned land prices continue to increase.
First, about the starting price. The starting price is still very low, much lower than the market price determined in full compliance with current regulations, calculated by multiplying the coefficient K by the city's land price list.
"The local People's Committee is still basing on the old land price list from 2020, effective until December 31, 2025. The starting price will only change when Hanoi issues a new land price list," VARs said.
Second, land prices at auctions continue to increase because the demand for real estate, especially products with legal guarantees and clear growth potential, such as auctioned land, is very high.
In fact, in areas such as Hoai Duc or Ha Dong, the potential for urban development along with infrastructure development creates great expectations for investors. Many investors are willing to pay high prices to own these limited-quantity products, even though the price may far exceed the actual value of the land.
Additionally, with the expectation that land will continue to appreciate in value in the future, buyers may accept prices much higher than the usual valuation.
In particular, the high price increase is due to the fact that the Hanoi real estate market is growing "hotly" with limited supply, the primary price continuously sets a new high level along with expectations about the expansion of the city and traffic infrastructure.
Another important reason for the high winning bid price is the behavior of paying a higher price and then forfeiting the deposit, not paying the winning bid, even willing to disregard the risks, fulfilling obligations in the auction to legalize the winning price with the purpose of "inflating the price", creating a "virtual" price level as a basis to push up the price of related land lots for profit.
Although the authorities have stepped in to inspect, this action is mainly to ensure the transparency and legality of the auction process, and it is difficult to interfere with market prices.
Sky-high land auction prices followed by deposit cancellations are becoming a 'common occurrence'. (Photo: ST)
Because in a market economy, the parties involved in buying and selling transactions follow the principle of willing buyer and willing seller. They can completely cancel the deposit without proof. And it is inevitable that they push up the price when any goods are scarce in the market.
"The current labeling of these behaviors as speculation and price inflation is also based on emotions. Vietnam has no legal documents defining this behavior as a basis for handling it," VARs stated.
Furthermore, under current regulations, an individual who wins an auction but fails to pay the full amount within 120 days is subject to a “fairly light” penalty, only having the result canceled and losing the deposit – very low due to the low starting price.
The revised Law on Property Auction has tightened regulations for land use rights auction winners, but these regulations will not take effect until January 1, 2025. However, even when the new regulations take effect, with the current supply-demand situation and the heat of the Hanoi real estate market, the possibility of new price records continuing to be set in the upcoming auctions is very high and will gradually become "a daily occurrence in the district". Because the speculative mentality still exists and the expectation of increasing real estate prices continues to be maintained.
Stronger measures are needed.
To ensure the auction process is fair and transparent, minimizing speculation and price inflation, VARS proposes a number of recommendations.
Firstly, auction organizers need to closely review and ensure that all auction processes and procedures comply with current legal regulations.
Second, State management agencies need to continue to closely monitor every "move" of the auctions to take timely corrective measures when detecting signs of "instability".
At the same time, consider promptly bringing into effect adjustments to mechanisms, policies, and stricter regulations related to this activity to promptly guide this activity in the right direction.
In particular, the penalty for deposit abandonment should be considered higher. Thus, increasing the "consideration" between "gains and losses" of individuals participating in the auction, somewhat limiting the "speculative trend" through auction activities.
Third, the State also needs to take stronger measures against cases of winning auctions but "changing hands" in a short time. In particular, the most important thing, according to VARS, is still the bottleneck in housing supply.
There needs to be active and practical measures soon to “unblock” the housing supply. In particular, reviewing and resolving projects that are stuck in legal issues is the fastest way to help pump more supply into the market.
"When supply gradually meets demand, the market will automatically adjust and the price issue in general and the auction price in particular will be closer to the real value of the property," VARs emphasized.
Source: https://www.congluan.vn/dau-gia-dat-cao-chot-vot-xong-huy-coc-dang-tro-thanh-chuyen-thuong-ngay-o-huyen-post318672.html
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