The Vietnamese real estate market has just gone through a period of fluctuations and is showing signs of recovery. However, the most concerning thing is that housing prices in big cities have increased, far exceeding the average income of the majority of people.
For example, according to a survey by real estate research companies in Ho Chi Minh City in the second quarter of 2024, the mid-range apartment segment increased by 2%, and the high-end segment increased by 5% compared to the same period in 2023. The scarcity of new supply also pushed up the selling prices of used apartment projects in Ho Chi Minh City. At the end of the second quarter, apartment prices in Ho Chi Minh City increased by an average of about 6% compared to the end of 2023.
Talking to many brokers, it is known that the actual price of real estate, especially apartments in Ho Chi Minh City, has increased too high, the projects introduced in the past have offered prices at 100 - 120 million VND/m2. Meanwhile, some projects with prices of about 45 - 60 million VND/m2 that are being traded are projects quite far from the center, with inconvenient transportation. The price of houses is high, but in reality, transactions are still not as active as expected by investors, even many businesses have not sold at this stage.
Many experts believe that in the coming time, when applying new laws, or the story of the new land price list, it will be more difficult for housing prices to decrease. In a market assessment report, Mr. Nguyen Quoc Anh, Deputy General Director of Batdongsan.com.vn, expressed his opinion that the new legal corridor with 3 new laws, namely the Housing Law 2023, the Real Estate Business Law 2023 and the Land Law 2024, will impact the increase in prices of many types of real estate.
“Land costs and many new regulations put upward pressure on both primary and secondary markets. The reason for the increase in land prices is due to the increased frequency of land price updates when the land price framework and land price list are removed and updated annually, instead of every 5 years as before. Land prices also increase due to increased accuracy when the deduction method is removed and from regulations on conditions for applying 4 land valuation methods,” said Mr. Nguyen Quoc Anh.
The Ministry of Construction has also just released a report stating that when applying land prices in 2024, according to calculations, land use costs for real estate projects will increase significantly compared to before. According to the provisions of the 2024 Land Law, the old land price framework will be abolished. Instead, the land price list will be determined closer to the market based on the purpose, land use period, input information, and other influencing factors... Therefore, the new land price list close to the market price will increase land-related costs such as site clearance, land recovery compensation, land-related taxes and fees... Meanwhile, costs related to land use fees often account for a large proportion of the total cost of a housing project, ranging from 7-20% for high-rise apartment projects and 25-50% for villa and townhouse projects.
Dr. Nguyen Duy Phuong, Investment Director of DG Capital, said that the cost of developing real estate projects will also increase throughout the entire process of developing real estate projects, which is one of the reasons for the increase in real estate prices. It is necessary to change the mindset towards not exploiting land, but to control land costs at a level suitable for the income of the majority of people. With the current high land costs, many businesses will not dare to invest in projects, making it difficult to increase housing supply in the near future.
