Land auctions are heating up again.

Recently, the land market in the suburban districts of Hanoi has become hotter than ever, with land auctions consistently selling out. The successful bid prices in each subsequent auction are constantly breaking the records of the previous one.

2-3 times higher than the surrounding area

Specifically, on July 28th, the Land Development Center of Dan Phuong district successfully held an auction of 85 land plots, including one plot that reached a winning bid of 100 million VND/m2, double the starting price. On August 10th, the auction of 68 land plots in Thanh Oai district recorded up to 7,000 applications, with one plot being won at a price exceeding 100 million VND/m2, surprising many.

Most recently, a record-breaking auction in Tien Yen commune, Hoai Duc district, lasted nearly 19 hours, from August 19th until 4:30 AM on August 20th. According to the organizers, the auction of 19 land plots in the Long Khuc area of ​​Tien Yen commune attracted 517 participants, with 1,100 applications submitted. The auction was tense, nerve-wracking, and exhausting for both the organizers and the bidders. Many left early because several plots were bid on at excessively high prices, driven by a desperate attempt to acquire the land at all costs.

While investors were bidding, outside the auction area, numerous real estate brokerage groups were present, live-streaming videos on social media platforms to report on the atmosphere around the auction area in order to inflate prices and speculate for profit.

As a result, lot LK03-12 (a corner lot with three street frontages) with an area of ​​over 113 m2 was bid up to 133.3 million VND/m2, more than 18 times higher than the starting price (7.3 million VND/m2). The remaining lots had winning bids ranging from 97.3 to 127.3 million VND/m2, with the lowest winning bid at 91.3 million VND/m2.

Some brokers present commented that the winning bid price was significantly higher than the current market price in the area. This is also a record high price for a suburban district of Hanoi.

Continuing observations on the morning of August 20th, after the auction ended, many real estate brokers were still operating at the Long Khuc village auction site. Some brokers said that the auctioned land plots were being resold at a markup of 300-500 million VND depending on the area and location. "The winning bid for plot LK03-12 (corner plot with 3 street frontages), measuring over 113 m2, was 133.3 million VND/m2, and the winning bidder is now reselling it for 300 million VND. The two plots with the lowest winning bids of 91.3 million VND/m2 are being resold for 600 million VND each," one broker said.

Mr. Dinh Minh Tuan, Director of the Southern region of Batdongsan.com.vn, commented that the high land auction prices will make land clearance costs for new projects more expensive. At the same time, people owning land in the surrounding area will likely push up the selling prices of their land accordingly. The sudden surge in land prices could also create a trend of land speculation, with many people rushing to buy land hoping to profit from the continued increase in prices. However, this could lead to a situation where money is tied up in land instead of circulating in other economic activities.

According to Mr. Tuan, the price history tool of Batdongsan.com.vn shows that the winning bids for 19 land plots in the LK03 and LK03 areas of Tien Yen commune, Hoai Duc district, were 2-3 times higher than the prevailing market price.

The area with 19 plots of land recently auctioned in Long Khuc area, Tien Yen commune, Hoai Duc district, Hanoi. Photo: HUU HUNG

Is there anything unusual?

According to Mr. Nguyen Van Dinh, Chairman of the Vietnam Association of Real Estate Brokers (VARS), since the end of last year, many real estate segments in Hanoi have continuously seen sharp price increases, especially apartment prices which have remained high (reaching nearly 60 million VND/m2 and showing signs of stagnation), causing investment profit margins to decrease significantly. For low-rise housing in some housing projects and urban areas, prices are also at several hundred million VND/m2. Therefore, many investors are looking to shift to land plots in suburban areas, with auctioned land attracting more attention.

According to Mr. Dinh, with the new real estate laws, effective from August 1st, tightening regulations on land subdivision and sale, the demand for suburban land has become even more vibrant. In particular, the news that some districts of Hanoi are preparing to become urban districts by 2025 has impacted the psychology of both residents and investors, leading to thousands of people participating in land auctions, while many auctions at the end of 2023 were lackluster, and some land plots even had to be postponed due to insufficient participants.

Speaking to the press, Professor Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, stated that the winning bid prices for land in Hanoi's suburban districts, located 30-40 km from the city center, being pushed up to over 100 million VND/m², is unusual. Land prices in these areas are being artificially inflated to levels that are unaffordable for most people.

Lawyer Nguyen Van Hai (Hanoi Bar Association) argues that land auctions are expected to bring immediate benefits to local budgets, but if not strictly managed, they could lead to many negative consequences. The obvious lesson from previous years is that artificially inflating land prices not only disrupts the market but also creates opportunities for speculators to drive prices even higher for profit, potentially leading to an unsustainable real estate bubble.

Dr. Tran Xuan Luong, Deputy Director of the Vietnam Institute for Real Estate Market Research and Evaluation, also noted that auctioned land in suburban districts of Hanoi such as Thanh Oai and Hoai Duc... fetched much higher prices than the market value, partly due to manipulation and price inflation by speculative groups. He observed recent auctions, noting the participation and high bids from investors from Hai Duong, Bac Ninh, and Bac Giang provinces. This is a factor that will push up land and real estate prices in the coming period, making it difficult for those with genuine needs to access the market. Therefore, Dr. Tran Xuan Luong proposed that to prevent speculation and price inflation, the deposit amount should be increased to 50% of the initial value, and auctioned land should only be bought, sold, or notarized after 1-2 years, or if resold within that period, a higher tax should be applied.

People need to be vigilant.

According to observations by reporters from Nguoi Lao Dong Newspaper and historical price statistics from batdongsan.com.vn, the common asking price for land plots in Tien Yen commune, Hoai Duc district in the second quarter of 2024 was approximately 43 million VND/m2, an increase of about 48% compared to a year ago. Asking prices for land plots in neighboring communes ranged from 22-62 million VND/m2, depending on location and transportation connectivity.

Interest in and prices of land plots in the outskirts of Hanoi have increased due to planning factors and auction activities. In the first half of 2024, land plot searches in the districts of Dong Anh, Gia Lam, Thach That, and Quoc Oai (Hanoi City) increased by 48%-104%, and this increased demand pushed land prices in these suburban districts up by 4% to 24% compared to the second half of 2023.

Real estate experts predict that land auctions will continue to be active from now until the end of the year, as the new land price list has not yet been applied. Determining the starting price based on the current state-set price framework will result in a much lower price compared to other types of land. Therefore, to avoid risks amidst the "heat" of land auctions in particular, and the real estate market in general, due to the influence and consequences of many factors, people need to be cautious before investing or considering a genuine need for housing.

Lack of tools to stabilize land prices.

According to Professor Dang Hung Vo, many real estate brokers are making phone calls everywhere asking about buying land and houses, and visiting properties in many places to artificially inflate market prices. The scale of land auctions in the outskirts of Hanoi in recent days has been very small, so speculators want to use these auctions to drive up prices, demonstrating that land prices are genuinely rising and guiding people towards higher prices. Meanwhile, many properties on main streets in central Hanoi are closing down due to the increasing popularity of e-commerce, while land prices in the suburbs are rising sharply, indicating the influence of the business community. "We are lacking the tools to manage the land market. In 2004, the government banned land subdivision and sale because it was incompatible with modern urban development. Many people bought land and then left it undeveloped. The land wasn't invested in or developed, but money was simply accumulated there, causing land prices to skyrocket. The recently enacted Real Estate Business Law also prohibits land subdivision and sale in special cities, type 1 cities, type 2 cities, and type 3 cities. We have tightened regulations on land subdivision and sale, but we still lack the only tool, real estate tax, to stabilize market prices," Professor Dang Hung Vo stated.

Source: https://nld.com.vn/dau-gia-dat-nong-tro-lai-196240820230512012.htm