Sir, many people wonder why real estate prices continue to increase, especially in Hanoi and Ho Chi Minh City, especially in the context of the three laws on land, housing, and real estate coming into effect. How do you explain this issue?
There are many reasons to explain the rapid increase in real estate prices in recent times, especially in large cities. However, the reason that will probably receive a large consensus is the lack of supply and the imbalance between supply and demand, especially apartments and small plots of land with average prices in the central area.
Why are there price fluctuations and shortages of supply when the Land Law, Housing Law and Real Estate Business Law have been effective since August 1?
In our opinion, because the number of new housing projects opened for sale is not much right after the new laws come into effect. Many people expect the supply to be more, but it is necessary to objectively assess that although the new regulations are flexible and reasonable, they only apply to newly implemented housing projects. These projects need to complete legal procedures and cannot be opened for sale right after the laws come into effect.
On the other hand, housing projects are being halted for various reasons such as: choosing the wrong investor, not meeting land regulations, etc., so there is still no solution. Old projects are therefore still in "waiting" mode for new policies to be resolved. Projects with "problems" that have not been resolved have not created a supply source for the market.
Second, the increase in "input" costs leads to an increase in land prices. Currently, localities are adjusting the land price list according to the provisions of the Land Law. For example, Ho Chi Minh City issued the Land Price List on October 21, in which compared to the 2020 land price list, many areas increased from 3 to 11 times higher than the old price, such as in Cu Chi district; Hoc Mon is 2 to 11 times higher... The high land price list will lead to a corresponding increase in land costs for people (land tax, land use fee when issued with a certificate, land use purpose conversion fee...).
For businesses, although the determination of project land prices is not based on the land price list, with the new regulations, land use fees determined for investment projects will not be lower than before. Especially in the context of higher compensation costs for site clearance, when the person whose land is recovered will receive more benefits than before.
The third reason is that the trend of real estate speculation is still popular. It is not difficult to affirm that people still want to invest in land because of its high profitability. Some people think that land is a good channel to keep assets. That is true for both investors and those who buy land to keep assets. The popular saying "a lifetime of business is not equal to the profit from a plot of land" is still true up to this point.
Speculation also leads to tricks to "increase" real estate prices. Auctions with sky-high prices and then voiding deposits disrupt market information such as in Thanh Oai, Hoai Duc... and even in Ha Dong recently with the winning bid of 262 million VND/m2, continuing to break the records of previous auctions. The consequence of these price "increases" is that market information is disrupted and buyers are in a "maze" of prices.
Do you think that adjusting land price lists in localities will increase real estate transfer prices on the market?
In our opinion, the adjustment of local land price lists is an objective necessity. The previously regulated land price lists do not reflect the actual value of land plots. Therefore, the adjustment and early application of the land price lists is necessary and helps the market to be transparent, stable, and resolves problems that have persisted for many years, such as: Calculating compensation prices for people whose land has been recovered will be more reasonable, limiting the situation of individuals collecting land and then changing the purpose of land for speculative purposes...
However, the increase in land prices in the price list also affects many groups of subjects, especially individuals who need to be granted land use right certificates, request to change the land use purpose of agricultural land plots in the same plot of land with houses, and pay non-agricultural land use tax... These are the subjects that will be negatively affected by the adjustment of the land price list because the cost of land use will increase.
For example, before adjusting the land price list, a 100 m2 plot of agricultural land had to pay 1 billion VND in land use fees due to change of purpose. If the land price list increased 2.2 times, the land cost of the people would increase by 2.2 billion VND. The costs of registration fees and non-agricultural land use taxes would also increase accordingly.
This will affect vulnerable subjects, especially people who have been using land that has been "suspended planning" for a long time without being granted a certificate, and now are eligible for a certificate. The cost of paying land use fees when the State recognizes it in some cases will increase compared to before.
Overall, we see that when the land price list, the specific land price (input land price) is determined closer to the market price, the transfer land price (output price) increases as a rule. Thus, even if the supply is improved, real estate prices may still be very difficult to "cool down" in a short time.
So, in your opinion, what is the solution to the current situation of sudden increase in real estate prices in the coming time?
To “cool down” real estate prices, many synchronous solutions from the authorities are needed. However, from a legal perspective, we believe that short-term as well as long-term solutions are needed.
In the short term, the competent authority should consider issuing a mechanism to handle projects that are suspended due to legal problems. In other words, there should be regulations to handle these types of projects in a decisive manner, allowing them to be implemented or completely terminated; and not allowing the current situation of "suspended" projects.
The "revived" projects are an important source of supply for the market in the coming time. The number of "stuck" projects is large and only a small number of these projects need to be implemented to change the supply for the market. On the other hand, to avoid the impact of land price adjustments, the Government needs to consider issuing regulations on exemption and reduction of land use fees, including the change of land use purpose for households and individuals.
In the long term, considering applying higher tax rates to those who own multiple properties, leave land fallow and buy and sell land in a short period of time is still a fundamental solution. This is not the only solution but is one of the important measures to regulate the market; contributing to limiting the amount of money people pour into real estate. Of course, applying such a tax law requires careful research on the appropriate timing and method.
In addition, information disclosure, digitalization promotion and the establishment of a national real estate exchange - a form of the current stock exchange - could be a sustainable solution. A national real estate exchange operating under the model of a public service organization managed by the State, integrated with the national database on population and land, will contribute to controlling actual transaction values, helping to make the market transparent and healthy.
Thank you very much!
Source: https://doanhnghiepvn.vn/kinh-te/du-an-duoc-hoi-sinh-la-nguon-cung-quan-trong-cho-thi-truong-bat-dong-san/20241028102534040
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