It is necessary to attach the responsibility of local leaders to the soaring land price phenomenon

Mr. Nguyen Van Dinh, General Secretary of Vietnam Real Estate Brokerage Association

Could you tell us the current situation of the land market in the country since the Lunar New Year?

We can use the word "boiling" to refer to the real estate market since the Lunar New Year. Prices increased rapidly in many localities, at an average increase of 10% after a month, some places increased two to three times in just a couple of months.

In many places, people quit business and production to invest in land. Bank deposits are also withdrawn for investment in land. In many localities, there has been a phenomenon of spreading false news about project planning and development, taking advantage of the direction of state leaders, creating fake documents to spread news and create waves. This has a very negative impact on the interests of investors who lack knowledge and experience.

The phenomenon of land for sale is not consistent with the law such as: forest land, field land, garden, appear regularly in the market. Many people regularly gather in these areas, create excitement, release a lot of information without basis, pushing prices up hour by hour, day by day, to entice investors. We affirm that this is not a professional real estate brokerage force operating on professional and reputable Real Estate Exchanges.

Could you tell us the reason for the soaring land prices?

The phenomenon of land prices increasing has many causes, first of all due to the land price bracket being adjusted by the local authorities to increase 15-20%.

Second, the demand for housing is very strong across the market, but the approval of investment in real estate projects, creating a supply source, has not shown any positive signals. Therefore, the supply in the market has not improved, lacking compared to the market demand, especially the housing projects in the affordable segment, social housing and land plot projects.

The third reason is the sudden increase in investment and deposit demands due to ineffective investment in other economic sectors due to the pandemic. At the same time, the bank interest rate dropped and the short-term investment in stocks and gold had great profit, so many investors quickly took profit and kept with land.

Therefore, it can be said that the demand for investment increases while the quantity of goods is scarce, causing the land price to increase sharply. At the same time, there are many investment phenomena in the market, regardless of the law.

What are the consequences of the increase of land prices, sir?

First of all, the rise in land prices has attracted national investors' resources into a spiral of land price increases, reducing investment resources for production development in many other sectors and fields of the country.

Many types of resources on land have been violated, changing functions not in accordance with the law. This wastes resources, affects economic development, and even destabilizes the locality in those areas.

This also strongly impedes the calling for and attraction of formal investment in localities because the increase in land prices leads to a series of other costs increasing, especially the cost of compensation for site clearance.

Thus, the development of the local economy where there is a land “fever” is unlikely to happen. If the economy does not develop, the land price will plummet, and those who invest in land before selling it will suffer heavy losses. Especially people who use credit leverage and have pledged their own assets.

Soaring land prices are likely to increase housing development costs, making it harder for the implementation of government policies to develop affordable and social housing. At the same time, it also creates pressure to increase housing prices in the context that some big markets such as Hanoi, Da Nang, Nha Trang, are also facing many difficulties in selling apartment products.

Finally, this destabilizes the national real estate market in general and the hot regions in particular. Affect the sustainable development of Vietnam's real estate market and implement state housing development policies.

What are your recommendations to control the land price increase in the future?

I think that the local government must drastically step in to control all land use activities, carry out investment projects, land transactions to ensure compliance with the law. It is necessary to attach responsibility of local leaders to the land fever phenomena.

Besides, it is necessary to manage people participating in the chain of listing, offering for sale, and organizing real estate transactions in the area. Providing full information on economic development policies, planning and land use plans in the area.

It is necessary to detect and handle false news, affecting the market, especially construction news that causes land fever and instability in the locality.

Along with that, the State needs to adjust laws towards digitizing real estate planning and products so that people can conveniently look up information. At the same time, it is necessary to continue to manage the exchange and real estate brokerage more closely and effectively.

Thank you!