Investors “sweat” because of land prices in Hanoi

Many real estate investors in Hanoi are "sitting still" when witnessing the chaotic and virtual price increase of the land segment.

Market cools down, but prices still rise

“Real estate prices in Hanoi are increasing very high. Land around Ring Road 4 has increased by at least 20% compared to the Lunar New Year period. When buying a house or land now, if the owner offers 10 dong, I will only pay 6 dong, then negotiate further. The current price is very virtual, not reflecting the real value of the property,” Mr. Ngo Xuan Chuc, Director of a real estate transaction center in Hanoi, shared with reporters of Dau Tu Newspaper.

This person said that land prices are being pushed up unfoundedly, mainly through word of mouth from sellers, but the transaction volume is not really active in the second quarter of 2024. In fact, the fact that prices continuously reach new peaks makes many customers confused and hesitant to spend money.

“Although the actual transaction volume is not much, the sellers are continuously raising prices to probe the market. The fever in the first quarter of 2024 has now cooled down, and the excitement from the buyers has also decreased,” Mr. Chuc commented.

The regulation on annual land price list in the 2024 Land Law is the most used reason by sellers to increase real estate prices.

Similarly, Ms. Dinh Huong, an investor with a lot of experience in taking advantage of market cycles to "surf" also expressed hesitation in the current market context.

“Real estate prices in Hanoi are increasing in all segments. According to my observations, the number of transactions is currently only equal to the period after Tet, but prices are continuously increasing. This makes me and many friends in the real estate investment community not rush to put down money,” said Ms. Huong.

Citing facts, this investor said that land prices in Ha Dong district increased by 15-20% compared to the first quarter of 2024. This increase occurred in most areas, from bustling places like Van Quan ward to locations far from the center like Yen Nghia ward.

“In Ha Dong district, a 50-square-meter plot of land with a main road running through it, located close to Ring Road 4, was offered for sale at VND3.5 billion before Tet, but now the price has increased to VND7 billion. The situation of real estate prices doubling in just half a year is no longer strange in areas around Ring Road 4,” said Ms. Huong.

A member of a “land hunting” team, holding a series of land lots worth up to 300 billion VND in Dong Anh district, revealed that before the Lunar New Year last year, speculative teams had bought a series of land lots in Xuan Canh and Co Loa. Currently, the lots with good locations in these areas have reached 200 million VND/m2.

According to this person, the above group started buying a series of land lots from 2023 at prices about 3 times lower than the current price. Many of them are real estate foreclosed by banks, so the price is softer than the market price.

When discussing the current price of land, members of this speculative group also admitted that the price is being pushed up excessively. The amount offered by the seller reflects future expectations, rather than reflecting the actual value of the product in the present.

Investors need to keep a “cool head”

Real estate businessmen all agree that the regulation on annual land price list in the 2024 Land Law is the most used reason by sellers to increase real estate prices.

Previously, compensation prices were based on the land price framework issued by the Government every five years. This time gap created a large gap between compensation prices and actual transaction prices. However, under the new law, land prices will be determined based on market principles, so when businesses implement projects, compensation costs for site clearance will increase compared to before. To ensure profit targets, investors are forced to increase product prices for end users.

“When the prices of apartments, shophouses, and villas increase, the residential real estate segment cannot stay out of the game. Although the annual land price list will not be applied until 2026, brokers are using this reason to push up selling prices right now,” Ms. Huong analyzed.

This investor added that in the context of the three laws related to real estate, the 2024 Land Law, the 2023 Housing Law and the 2023 Real Estate Business Law, which have only been implemented since August 1, investors do not have much basis to put money into big deals.

Sharing the same view, Mr. Ngo Xuan Chuc also said that investors should stay calm and avoid FOMO (fear of missing out) following the market. If possible, buyers can wait until the end of the year to see more clearly the impacts of the three new laws, then make a final decision.

According to a survey by the Batdongsan.vn information site on the real estate market situation in the second quarter of 2024, the number of searches for land for sale in Hanoi (land plots, residential land) in the first 6 months of the year increased by 118% compared to the same period in 2023.

Despite recording a positive recovery in buyer sentiment, experts from this website said that the market is unlikely to have major fluctuations in the next quarter. The reason comes from the fact that buyers still want to witness more impacts of management policies and deposit interest rates are on the rise again.

This sentiment is clearly reflected in the survey results of 325 brokers on the land transaction situation in the second quarter of 2024. Accordingly, 35% of brokers said that the transaction volume was only stable; 29% said that the transaction volume was decreasing.

Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan.com, commented that this exploration will last from now until the end of the fourth quarter of 2024 and end in early 2025. Only when the market enters a stable phase can real estate types fully recover. This phase is forecast to take place in the first quarter of 2026 at the earliest.

Source: https://baodautu.vn/batdongsan/nha-dau-tu-toat-mo-hoi-vi-gia-dat-nen-ha-noi-d222125.html