Expert: Land prices are high, housing prices are difficult to cool down

Mr. Nguyen Quang Huy - CEO of the Faculty of Finance and Banking (Nguyen Trai University) said that updating land price list Approaching market prices is an inevitable trend. However, the adjustment must be implemented properly, not as a “burden”, but as a step towards fairness, transparency and sustainable development.

According to him, in the context of high real estate prices, people's incomes have not kept up and the Government is advocating to cool down housing prices to ensure social security, raising land prices too sharply needs to be considered thoroughly, delicately and strategically, so as not to accidentally turn land - which is the driving force for growth - into a barrier to development.

Experts say that with land prices rising, housing prices will have difficulty cooling down. (Illustration: Minh Duc).

In essence, the land price list is the basis for determining land use fees, taxes, fees and compensation, which is the “input” stage of every real estate project. When the land price list increases many times, especially in central districts, the input costs of businesses increase sharply and are inevitably reflected in the selling price of houses.

In fact, in many projects in Hanoi , land costs account for 30-50% of the cost structure. Thus, if the land price list increases by only 20-30%, the final selling price can be pushed up by tens of percent.

" This makes the dream of home ownership for middle-income earners even more distant, while the market is at risk of serious imbalance - too many luxury houses, not enough affordable houses ," Mr. Huy emphasized.

Sharing the same view, Dr. Tran Xuan Luong - Deputy Director of the Vietnam Institute for Real Estate Market Research and Evaluation - also said that the proposal by some localities to increase land prices at the current stage is not appropriate.

With land costs accounting for 30-50% of input costs, increasing land prices could lead to further escalation of real estate prices.

In addition, crowd psychology and the FOMO effect (fear of missing out) are strongly dominating. real estate market In Vietnam, a move like increasing land prices can quickly make people and investors believe that prices will continue to increase, thereby promoting speculation and creating a virtual fever more than the consulting unit wants.

The Vietnam Real Estate Association also emphasized that the Government, ministries, sectors and localities are currently looking for solutions to reduce real estate prices in the market. One of the effective solutions is to reduce input costs that make up the selling price of real estate.

However, the increase in land prices will affect the cost, thereby affecting the housing access opportunities of those with real housing needs. For commercial housing, if land prices increase, it will affect the feasibility of the project, causing housing prices to continue to increase.

If land prices increase, it will lead to high housing costs, reducing investment attractiveness, especially investment in real estate projects in suburban areas. The lack of investment projects will affect the city's housing development plan in suburban areas for the purpose of population dispersion. From there, the housing supply on the market will continue to decrease, making it difficult to stabilize social security in the area.

In addition, the real estate market is in a fragile recovery process, many businesses have to restructure, capital flow is limited, if land prices increase at this time, it can create a double burden, slowing down the market recovery. Currently, the price for students to rent near universities has increased by about 30%. If land prices increase, it will also create a level of rent prices. This will cause difficulties for students and people who rent houses.

Reduced investment attraction advantages

Not only does it cause housing prices to increase, according to many experts, if land prices increase too high, it will also reduce the advantage of attracting investment.

Mr. Nguyen Quoc Hiep, Chairman of the Vietnam Association of Construction Contractors, commented that high land prices could reduce Vietnam's investment attractiveness. According to Mr. Hiep, the occupancy rate of 80-90% in most industrial clusters today comes from three main advantages: low labor costs, reasonable land prices and convenient logistics infrastructure.

" But if we lose the reasonable land factor, while labor costs are increasing, will our advantage in attracting investment still exist? ", he asked.

High land prices reduce investment attraction advantages. (Photo: Minh Duc).

According to him, the 2024 Land Law requires ensuring the harmony of interests between the State, land users and investors, but in reality, in the current method of determining land prices, the interests of enterprises, including land leasing and land using enterprises in general or real estate development enterprises in particular, have not been properly taken into account.

" High land prices cause investment costs to increase and risks to increase, so which businesses dare to implement projects? If businesses do not implement projects, the locality's sustainable revenue will also be affected ," Mr. Hiep emphasized.

Dr. Can Van Luc - Member of the Prime Minister 's Policy Advisory Council also affirmed that this is an inevitable requirement in the process of urban development, but must ensure the harmony of interests. The State needs to collect the right amount of tax, but cannot trade it off by pushing up the cost of living and housing prices.

" If the land price list is built too high compared to the economy's tolerance, it will create a chain effect, affecting public investment, FDI attraction and especially people's housing opportunities ," Mr. Luc affirmed.

Rising land prices cause investment costs to increase and risks to increase, so which businesses dare to implement projects?

Mr. Nguyen Quoc Hiep, Chairman of Vietnam Association of Construction Contractors

Should not increase all at once, increase shock

According to experts, land price adjustment needs to be specifically zoning and should not be adjusted suddenly or increase shockingly.

Mr. Nguyen Quang Huy emphasized that the core issue in adjusting the land price list lies in the implementation. It is impossible to let the land price list increase simultaneously without corresponding support mechanisms. A good land policy must ensure three pillars: the State receives fair resources, businesses have healthy business space and people have access to housing at reasonable costs.

To do so, it is necessary to apply a flexible adjustment coefficient mechanism, clearly distinguishing regions, land types and usage purposes. Land for social housing development and affordable commercial housing should be exempted, reduced or extended land use fees. Meanwhile, land for high-end, commercial projects or exploiting the advantage of central location can apply prices close to the market to avoid budget losses.

At the same time, there needs to be strong reforms in planning, procedures and legal costs - factors that currently account for a significant proportion of housing prices. When the project preparation process is prolonged, capital costs and loan interest rates increase, investors will add to the selling price, causing housing prices to exceed their real value. If planning is transparent, approval is quick and there is long-term forecasting, and intermediary costs are reduced, then even if the land price list is higher, housing prices can still be stable.

" At the macro level, land is not only a source of revenue but also a driving force for sustainable growth. When planned intelligently and exploited properly, land will become "development capital" - creating infrastructure, industry, urban areas, and jobs. On the contrary, if we only see land as a short-term source of revenue, we can easily fall into a spiral of increasing prices, reducing accessibility, causing inequality and hindering national competitiveness ," Mr. Huy emphasized.

Therefore, according to him, it is necessary to reshape the development philosophy, land is not a burden to be exploited but a strategic resource that needs to be operated as a long-term capital flow. A reasonable land price list - reflecting the true market value but with policy flexibility - will both help the budget increase revenue transparently and create a basis to reduce housing costs through cutting other costs, while encouraging businesses to develop sustainably.

According to Vice President of Hanoi Real Estate Club Nguyen The Diep, land price lists in many countries both ensure and reflect the correct market value while maintaining economic and social stability.

He cited Singapore as an example of land pricing based on the “urban life cycle”, taking into account the development potential for the next 10-20 years, with state land prices increasing steadily by 2-5% per year, linked to infrastructure and population indexes. This country also publicly discloses land pricing maps online, helping to make information transparent and limit speculation.

He believes that Vietnam needs to have a synchronous land database, connecting from taxes, notaries, banks, and trading floors - instead of relying only on administrative surveys. Land price lists need to be publicly announced, easy to look up and have a social feedback mechanism; There should be no sudden adjustments, but can be increased gradually by 3 - 5%/year depending on the area to avoid "price shock" and negative impacts on the housing market.

The Hanoi Department of Agriculture and Environment recently submitted a draft on the construction of the first Land Price List (the first Land Price List according to the provisions of Article 257 of the 2024 Land Law) to be announced and applied from January 1, 2026. According to the draft, residential land prices in Hanoi are expected to increase by 2% - 26% compared to the current land price list.

Not only Hanoi, many localities across the country also entered a similar "land price increase cycle" in the period 2024 - 2025. In Ho Chi Minh City, the adjusted land price list effective from October 31, 2024 increased from 4 to 38 times, the highest level reaching 687.2 million VND/m². Bac Giang (old) also recorded an increase of about 2.4 times, with the highest land price reaching 120 million VND/m². Hai Phong even had places increase up to 373% compared to the old price list.

Source: https://baolangson.vn/chuyen-gia-bang-gia-dat-tang-cao-gia-nha-kho-ha-nhiet-5063472.html