In recent days, the real estate market has witnessed new records of land auctions and winning bids in suburban districts of Hanoi such as Thanh Oai, Quoc Oai, Hoai Duc... The number of registrations is large, the auctions are until midnight, the winning bids have skyrocketed, many times higher than the starting price...
Most recently, the auction of 27 plots of land in Ha Dong district was held until after 11pm with the winning bid price being pushed much higher than the starting price. In particular, the plot of land with the highest price was over 262 million VND/m2, more than 8 times higher than the starting price.
Explaining the appeal of auctioned land, Mr. Nguyen Van Dinh - Chairman of the Vietnam Association of Real Estate Brokers (VARS) said that auctioned land is "clean" land, not involved in litigation disputes, some real estates already have red books and infrastructure. This is an important factor in gaining the trust of investors in the context of legal issues being a barrier causing many projects to stagnate.
In particular, in the context of the recent years, Hanoi has had almost no new projects, the supply of land is forecast to become increasingly scarce, while the demand for real estate, including the demand for buying for living and investment among people is always high. The attraction of this type of real estate is also due to the low starting price, low deposit, many auctions only require deposits of 100 - 200 million VND.
However, Mr. Dinh also said that the winning price of more than 100 million VND/m2, in some suburban areas, in locations with unremarkable infrastructure and utilities, is unusual, exceeding the actual value and showing the unhealthy intentions of some investors.
The analyst said that investors participating in these auctions are people who have a "profession" in land auctions. They often participate with the purpose of "surfing", winning the auction and then immediately selling the land to make a profit or are ready to forfeit their deposit if the market does not respond.
The more dangerous purpose is to create a "land fever". These individuals take advantage of the auction deposit to inflate the prices of related land plots. They even disregard the risks, legalizing the price by paying in full according to the winning bid price, to use this price as a basis to stimulate land prices in outlying districts, causing land prices in many places to escalate, even creating a virtual fever.
"The consequence of these situations is that real estate prices, which were already high, are now increasing, making the dream of owning a home increasingly distant for people, especially young people. The high auction prices, far exceeding the real value, not only cause difficulties in the appraisal of assets for subsequent auctions at the auction location but also in many places across the country," the Chairman of VARS warned.
Therefore, for auction activities to take place transparently, the State needs to soon have more mechanisms to control speculative activities. At the same time, the authorities need to change people's thinking about housing, so that housing is a place to live, solving people's living needs, not an accumulated asset...
