Land auctions "heat up" again

Recently, the land market in the suburban districts of Hanoi has become "hotter" than ever when land auctions are continuously "sold out". The successful auction prices in the following sessions continuously break the records of the previous sessions.

2-3 times higher than surrounding areas

Specifically, on July 28, the Land Fund Development Center of Dan Phuong district successfully organized an auction of 85 land plots, including a winning lot with a price of VND100 million/m2, double the starting price. On August 10, the auction of 68 land plots in Thanh Oai district recorded 7,000 participating documents, including a winning lot with a price of more than VND100 million/m2, surprising many people.

And most recently, the record auction in Tien Yen commune, Hoai Duc district lasted nearly 19 hours, from August 19 to 4:30 a.m. August 20. According to the organizers, the auction of 19 plots of land in Long Khuc area, Tien Yen commune had 517 customers participating, registering 1,100 sets of documents. This auction was tense, exciting and tiring for both the organizer and the bidders. Many people left early because many plots of land were offered at too high a price, in the style of "trying to force the issue", "buying at all costs".

While investors were bidding, outside the auction, many real estate brokerage groups and associations were present, turning on live video streaming mode on social media platforms to report on the atmosphere around the auction area in order to inflate prices and speculate for profit.

As a result, lot LK03-12 (corner lot with 3 frontages) with an area of ​​over 113 m2 was bid up to 133.3 million VND/m2, more than 18 times higher than the starting price (7.3 million VND/m2). The remaining lots had winning prices from 97.3-127.3 million VND/m2, the lowest winning lot was at 91.3 million VND/m2.

Some brokers present said that the auction price was much higher than the current market price in this locality. This is also a record high price in a suburban district of Hanoi.

Continuing to record on the morning of August 20, after the auction ended, there were still many real estate brokers operating at the Long Khuc village auction area. Some brokers said that the land lots after the auction were being sold at a difference of 300-500 million VND depending on the area and location. "The price of lot LK03-12 (corner lot with 3 fronts) with an area of ​​over 113 m2 with a winning price of 133.3 million VND/m2 was consigned by the winning bidder for a transfer price of 300 million VND. The 2 lots with the lowest winning price of 91.3 million VND/m2 were consigned for a transfer price of 600 million VND/lot" - a broker said.

Mr. Dinh Minh Tuan, Southern Regional Director of Batdongsan.com.vn, commented that the results of land auctions with such high prices will make the cost of site clearance for new projects more expensive. At the same time, people who own land in the surrounding area will have the mentality of pushing up the selling price of their land. The sudden high land price can also create a trend of land speculation, when many people rush to buy land in the hope of making a profit from the continued increase in land prices. However, this can cause a situation where money is stagnant in land, instead of being circulated in other economic activities.

According to Mr. Tuan, the price history tool of Batdongsan.com.vn shows that the auction price of 19 plots of land in LK03 and LK03 in Tien Yen commune, Hoai Duc is 2-3 times higher than the common price on the market.

Area of ​​19 land lots just auctioned in Long Khuc area, Tien Yen commune, Hoai Duc district, Hanoi city. Photo: HUU HUNG

Is there anything unusual?

Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Realtors (VARS), assessed that since the end of last year, many real estate segments in Hanoi have continuously increased in price, especially apartments at a high level (reaching nearly 60 million VND/m2 and tending to stagnate), causing investment profit margins to decrease sharply. For the low-rise housing segment in some housing projects and urban areas, it is also at the threshold of several hundred million VND/m2. Therefore, many investors have the need to shift to suburban land, in which auctioned land is of more interest.

According to Mr. Dinh, when the new laws related to real estate took effect from August 1, tightening the subdivision and sale of land, the demand for suburban land became more and more exciting. In particular, the information that some districts in Hanoi are preparing to become districts in 2025 has affected the psychology of both people and investors, leading to thousands of people going to land auctions, while many auctions at the end of 2023 were quiet, and many plots of land had to be postponed due to lack of participants.

Speaking to the press, Professor Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, said that the auction price of land in suburban districts of Hanoi, 30-40 km from the city center, being pushed up to more than 100 million VND/m2, is unusual. Land in the suburbs is being raised to a high price that people cannot afford.

Lawyer Nguyen Van Hai (Hanoi Bar Association) said that land auctions are expected to bring immediate benefits to the local budget, but if not strictly managed, they could cause many negative consequences. The obvious lesson over the past years is that pushing up land prices not only disrupts the market but also creates conditions for speculators to push land prices higher to make a profit, potentially creating an unsustainable real estate bubble.

Dr. Tran Xuan Luong, Deputy Director of the Vietnam Institute for Real Estate Market Research and Evaluation, also stated that the auctioned land prices in suburban districts of Hanoi such as Thanh Oai, Hoai Duc... are much higher than the market price, partly due to manipulation and "price inflation" by speculative groups. According to recent auctions, a group of investors from Hai Duong, Bac Ninh, Bac Giang... have participated in the auction and paid high prices. This is a factor that will push up the price of houses and real estate in the coming time, making it difficult for those with real needs to access. Therefore, Dr. Tran Xuan Luong proposed that to prevent speculation and price inflation, it is necessary to increase the deposit to 50% of the original value and the auctioned land must be bought and sold after 1-2 years, notarized, or if transferred during the above period, high taxes will be charged...

People need to be alert

According to the actual records of the reporter of Nguoi Lao Dong Newspaper and according to the historical price statistics tool of the website batdongsan.com.vn, the common price of land for sale in Tien Yen commune, Hoai Duc district in the second quarter of 2024 is about 43 million VND/m2, an increase of about 48% compared to 1 year ago. The price of land for sale in communes neighboring Tien Yen commune is advertised from 22-62 million VND/m2, depending on the location and convenience of traffic connection.

Interest and land prices in suburban areas of Hanoi increased thanks to planning and auction activities. In the first half of 2024, land in the districts of Dong Anh, Gia Lam, Thach That, Quoc Oai (Hanoi) recorded an increase in searches from 48% -104%, increased demand pushed land prices in suburban districts of Hanoi up from 4% to 24% compared to the second half of 2023.

Real estate experts predict that from now until the end of the year, land auctions will continue to be active when the new land price list has not been applied, the determination of starting prices applied according to the current State price framework will be much lower than other types of land. Therefore, to avoid risks due to the "heat" of land auctions in particular and real estate segments in general due to the influence and consequences of many of the above factors, people need to be alert before investing or having real housing needs.

Lack of tools to stabilize land prices

According to Professor Dang Hung Vo, what many brokers are doing is calling everywhere to ask about buying real estate, going to see real estate in many places to stimulate market prices. The scale of land auctions in the suburbs of Hanoi in recent days has been very small, so speculators want to use land auctions to push prices up, proving that land prices are really going up, leading people to high prices. While many houses on the central streets of Hanoi are closed and empty because e-commerce is becoming more and more popular, the price of land in the suburbs is increasing sharply, meaning that there is an impact from the business community. "We are lacking tools to manage the land market. In 2004, the Government banned the subdivision and sale of land because the subdivision and sale of land was not suitable for the process of modern urban development. Many people bought land and left it there. The land was not invested or developed, but money was kept there, causing the land to increase many times. The Law on Real Estate Business that has just come into effect also prohibits the subdivision and sale of land in special urban areas, type 1 urban areas, type 2 urban areas, and type 3 urban areas. We have tightened the subdivision and sale of land but still lack the only tool, which is real estate tax, to stabilize market prices," said Professor Dang Hung Vo.

Source: https://nld.com.vn/dau-gia-dat-nong-tro-lai-196240820230512012.htm