Reasons for the "sky-high" winning bid
Previously, in August, public opinion was constantly stirred up by land auctions in suburban districts of Hanoi such as Thanh Oai and Hoai Duc, with a large number of registrations, long auction times and soaring winning bids, dozens of times higher than the starting price. This development and result continued in recent land auctions in Ha Dong and Thuong Tin.
According to the Vietnam Association of Realtors (VARS), the reason for the starting price being still very low, much lower than the market price is determined to be completely in line with current regulations. In addition, land prices at auctions continue to increase due to the demand for real estate, especially legally guaranteed products with clear growth potential, such as auctioned land.
In particular, the high price increase is due to the fact that the Hanoi real estate market is growing rapidly with limited supply, the primary price continuously sets a new high level along with expectations of city expansion and traffic infrastructure.
In addition, there are also acts of paying higher prices and then forfeiting the deposit, not paying the winning bid, even being willing to disregard risks, fulfilling obligations in the auction to legalize the winning price with the purpose of "inflating prices", creating a "virtual" price level as a basis to push up the prices of related land lots for profit.
Furthermore, according to current regulations, individuals who win auctions but do not pay the full amount within 120 days will be fined “quite lightly”, only having the results canceled and losing their deposit – very low due to the low starting price. The revised Law on Property Auctions has tightened regulations for land use rights auction winners, but these regulations will not take effect until January 1, 2025.
Need to follow every move of the auctions
To ensure the auction process is fair and transparent, minimizing speculation and price inflation, according to VARS, the following issues need to be noted. Firstly, auction organizers need to closely review and ensure that all auction processes and procedures comply with current legal regulations.
Second, State management agencies need to continue to closely monitor every move of the auctions to take timely corrective measures when detecting signs of instability.
At the same time, consider soon putting into practice stricter adjustments to mechanisms, policies and regulations related to this activity to promptly guide this activity in the right direction. In particular, the penalty for deposit abandonment needs to be considered to be raised.
Third, the State also needs to take stronger measures against cases of winning auctions but "changing hands" in a short period of time.
In particular, the most important thing, according to VARS, is still the bottleneck in housing supply. It is necessary to have active and practical measures soon to unblock the housing supply. In particular, reviewing and completely resolving projects that are stuck in legal issues is the fastest way to help pump more supply into the market.
