Participate in auction to get land or price inflation trick?
Over 100 million VND/m2 is the highest winning price in the auction of 68 land lots in Thanh Cao commune, Hanoi in mid-August 2024. Notably, the auctioned land is about 40km from the center of Hanoi and the infrastructure has not changed much over the years.
According to the reporter's research, residential land in the village in this area only costs from 30-40 million VND/m2. Only large, beautiful and convenient locations on the road cost 70-80 million VND/m2. Obviously, this is a big difference compared to the auctioned land price.
Up to now, more than a month has passed, although the deadline for paying for the first auction of 68 land plots in Thanh Cao commune has expired, many auction winners have not yet paid the full amount as agreed.
Mr. Nguyen Cong Quang - Director of the Center for Land Fund Development in Thanh Oai District (Hanoi) - said that so far, only 13 plots of land have paid in full, which are plots with low winning prices. The plot of land with a winning price of more than 100 million VND/m2 has not yet paid the first installment.
The Director added that according to regulations, the auction results must be canceled after 120 days, so the district does not have a plan or deadline for re-auction.
In fact, not only in Thanh Oai but also in Hoai Duc district, an auction took place that lasted for 19 hours with 19 land lots in Tien Yen commune. The highest winning price was lot LK03-12 (133.3 million VND/m2). Compared to the starting price of 7.3 million VND/m2, the winning price was 18.2 times higher.
In recent days, real estate forums have been discussing a reason why the winning price in the suburban district can reach such a high level. It could be due to the participation of speculative groups and associations, pushing up the price. Or it could be a trick of a group pooling money and effort to auction a lot, pushing the price to the highest level.
For example, a winning auction plot is worth 100 million VND/m2, while other plots are only worth 50-60 million VND/m2. They will make an excuse that the auction land price there will be higher and then sell the winning plots at 50-60 million VND/m2, plus a certain difference in price to the market. They will profit from this difference, which can be up to several hundred million VND, within just a few days, or even just a few hours after the auction ends. As for the plots with a sky-high price of more than 100 million VND/m2, they are willing to forfeit their deposit.
Need a solution to the problem of deposit abandonment
According to Mr. Nguyen Quoc Hiep - Chairman of the Vietnam Association of Construction Contractors, some people who lack information or are gullible and are not professional investors will certainly suffer huge losses because prices will jump up and down.
Sharing with reporters, Dr. Tran Xuan Luong - Deputy Director of the Vietnam Institute for Real Estate Market Research and Evaluation - said that real estate speculators often use many sophisticated tricks to profit from the land market.
According to Dr. Luong, before the official auctions take place, these groups often quietly buy plots of land in neighboring areas at low prices. Then, when the auctions take place, they push up the prices of the new plots, creating a price-increasing mentality for the entire area. When the land prices are pushed to the highest level, they resell the plots of land they had previously invested in at high prices, earning huge profits.
The consequences of uncontrolled land auctions are very serious, distorting the market and possibly causing many consequences for the economy and society.
To prevent uncontrolled land auctions, Dr. Tran Xuan Luong said, it is necessary to closely manage and monitor the auction process; reform tax policies; synchronous planning and development; carefully review documents; and perfect the land information system.
Sharing about the above issue, according to National Assembly delegate Pham Van Hoa (Dong Thap delegation), some cases of abandoning auction deposits have disrupted the market, "tarnished the image of the auction", and caused negative public opinion recently.
To stop the situation of auction winners abandoning their deposits, Mr. Hoa said that measures should be taken such as raising the deposit level higher than current regulations, applying administrative sanctions, and not allowing them to participate in the next auction.
