Abolishing the annual land price list: Will housing prices cool down?

The annual land price list will be replaced by a 5-year land price list and an annual land price adjustment coefficient. The State will control primary land prices to reduce input costs for housing projects, thereby helping to cool down housing prices.

According to experts, the 5-year land price list according to the revised draft will help control land prices and cool down housing prices - Photo: QUANG DINH

Real estate experts say this is a suitable direction in amending the current Land Law, but in addition to reducing land costs for housing projects, to cool down housing prices, it is necessary to remove obstacles for thousands of stuck projects to increase housing supply.

Curb input land prices of projects

Land costs account for about 15-30% of the total investment costs of housing projects, in the central area, land costs account for up to 50% of the investment costs of housing construction. Since the application of the 2024 Land Law, land costs of housing projects have tended to increase as localities implement the policy of applying land price lists close to the market.

Talking to Tuoi Tre , Mr. Nguyen Quoc Hiep, Chairman of the Vietnam Association of Construction Contractors, said that if the current land price list is applied, land prices will chase housing prices. Now we amend the law in the direction of building a land price list applicable for 5 years with a land price adjustment coefficient to control the input land prices of housing projects.

This meets the expectations of the whole market and all land users. The State also controls the input factors of production and business.

"The amendment of the law to replace the annual land price list with a 5-year land price list is very reasonable. If it is not changed, the provinces will have no way to build an annual land price list close to the market. Changing the land price list once a year will not work," Mr. Hiep emphasized.

According to Mr. Le Hoang Chau - Chairman of the Ho Chi Minh City Real Estate Association, the mechanism of issuing annual land price lists has made the entire state apparatus have to deal with a huge amount of work, very difficult. Issuing a land price list with a term of 5 years will be suitable for the administrative capacity of the current two-level local government system.

In addition, the State can also use the land price adjustment coefficient to regulate the real estate market. After more than a year of implementation, the 2024 Land Law has also shown shortcomings, inadequacies and weaknesses that need to be amended. And in this draft revised Land Law, the land price adjustment coefficient is not just one coefficient.

"There will be many land price adjustment coefficients. If necessary, the state management agency will issue land price adjustment coefficients to apply to each project. Previously, when applying the 2013 Land Law, Ho Chi Minh City issued an average of about 30 decisions on land price adjustment coefficients every year," said Mr. Chau.

Increased supply will cool housing prices

Some experts believe that whether land costs will decrease or not still depends on the locality issuing the land use coefficient. In the immediate future, the Government needs to issue a decree with specific regulations to guide the issuance of land use coefficients and the rate of revenue from land use, this is extremely important.

In addition to controlling the input land costs of housing projects, according to Mr. Chau, it is necessary to increase housing supply to cool down housing prices, because high housing prices are largely due to supply and demand. Low supply and shortages lead to high housing prices. And to increase housing supply, it is necessary to quickly resolve the backlog of about 3,000 projects due to legal problems. When supply increases, there will be no more price manipulation and price inflation.

"Housing prices are too high partly because we are making it difficult for ourselves because of the lack of housing supply due to thousands of projects having legal problems, causing housing prices to increase. Now, if we can resolve the legal problems of the projects, we will increase the housing supply, then the market will balance itself and housing prices will cool down," Mr. Chau added.

Dr. Vu Dinh Anh, an economic expert, believes that if we still maintain the view that land valuation is close to market price, we will never fundamentally solve the problem. Instead, we need to affirm the principle of land valuation according to market mechanisms, and at the same time build an objective, transparent, and professional land valuation market.

Mr. Anh proposed to completely eliminate the land price framework and land price list, which have caused many problems. Instead, there will only be specific land prices decided by competent authorities at the time of land allocation, land lease or through the results of land use rights auctions. With land prices as the basis for financial obligations (taxes, fees, land use fees, land rent), it should be determined by a mass pricing mechanism by region and by purpose of use.

"Land price management is being scattered in many different laws, from the Law on Prices, the Land Law, the Law on Property Auction, leading to overlap and inconsistency. Only when consistency, synchronization and especially strict compliance with market principles in land valuation can we build a transparent and effective legal framework that meets development requirements," Mr. Anh suggested.

According to the draft revised Land Law, the State decides on primary land prices. As for the secondary land market, the State will regulate it through taxes, credit, planning and land use plans. With this revised regulation, land prices in the primary market will not follow the transaction prices in the secondary market; on the contrary, the State will control the market.

Mr. Nguyen Quoc Hiep, Chairman of the Vietnam Association of Construction Contractors, said that land use fees are a matter of life and death for many real estate investment and trading enterprises. In fact, for the same housing project in Hanoi , from the first land allocation decision to the second land allocation decision, the land price increased by 20% and continued to increase by 20% on the third land allocation.

"Every time land is allocated, the price increases, causing businesses' costs to increase unreasonably. This is the biggest problem," Mr. Hiep emphasized.

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Source: https://tuoitre.vn/bo-bang-gia-dat-hang-nam-gia-nha-co-ha-nhiet-20250822232433586.htm