Local authorities struggle to stop real estate bubble
The real estate market remains feverish not because of high demand and short supply, but because of speculation, experts have said.
Land prices have often escalated based on unclear information or rumors about important infrastructure projects such as airports and highways in localities.
With the existence of numerous real estate brokers, land prices are pushed up to sky high levels. The problem is that though land is overvalued during these "land fever" periods, it still sells well because buyers believe they will still make a profit later when the prices increase.
However, the real estate bubble only exists for short periods, which lead to losses for many speculators when prices drop and they can't sell their properties.
Since 2020, the market has seen land fever in Binh Ba commune, Chau Duc district in Ba Ria – Vung Tau; Dong Truc commune, Thach That district in Hanoi; and in Hon Quan district in Binh Phuoc province more recently. This has spread to many other areas throughout the country.
In HCM City, the land price in the eastern part of HCM City rose by twofold within only one to two years.
The price of land near the city’s administrative center has been pushed up to sky-high levels. Brokers said the land in Thanh My Loi Ward is now traded at VND140-VND350 million per square meter, an increase of VND40-VND60 million.
Analysts said the local land price has increased by 360% compared with the 2007 peak.
In Hanoi, the land prices in Hoai Duc district have soared by 30%-40%. In late 2020 and early 2021, the prices of land at some projects that have been left idle for nearly a decade suddenly soared by 2-3 times. The prices of other real estate products, including villas, have also increased sharply.
At Ha Do Charm Villas on Hoai Duc district, for example, most of the villas are priced at over VND70 million per square meter, while some small villas are being sold at VND80 million per square meter.
At An Lac Symphony, the average price is VND110-VND120 million per square meter for semi-attached houses, and no less than VND90 million per square meter for villas.
In Quang Ninh province, according to Ha Long City People’s Committee, trading is now occurring at land plots in the Cau Bang residential quarter project in Thong Nhat commune, developed by Thong Nhat 508 JSC, and at Thong Nhat commune residential quarter project, developed by Phuc An Co Ltd, as well as at projects in Cao Xanh and Ha Khanh Wards.
Local authorities believe that these are activities of well-organized speculators who previously quietly bought land at low prices and then exploited the information about urban development plans to create an artificially high-priced market.
A lot of land transactions in these areas have occurred, but the transactions are among speculators who have worked together to create demand to attract buyers.
Warnings
Hanoi, Quang Ninh, Bac Giang and Quang Tri have warned people about land speculation in an effort to stop the real estate bubble.
Ha Long authorities have sent a dispatch to communes and wards, asking them to strictly implement state management tasks and observe the procedures on authenticating transactions related to land-use rights.
Bac Giang said it would organize inspection tours and strictly control institutions and individuals who act as intermediaries and trade properties while not meeting conditions stipulated by law.
It will also remove from the local annual land-use plan any project that has not been implemented after three years of registration.
Quang Tri province, in order to strengthen land management, has requested agencies to speed up the compilation of the 2021 land-use plan and land planning to 2030.
In Hanoi, regarding the Red River urban subdivision planning, the Hanoi Party Committee has asked district people’s committees to strengthen land and urban management to prevent the corrupt use of planning that involves land speculation.
The Ministry of Construction, reviewing the real estate market in 2020 and the first two months of 2021, reported that corrupt use of information about urban development projects to seek illegal profits had occurred.
The ministry said it will give advice to the PM to instruct local authorities to intensify supervision over the real estate market, with the aim of discovering and strictly punishing those who push up prices to seek illegal profits.
