Land auctions in suburban districts of Hanoi have been the focus of the real estate market recently, with thousands of applications and record high winning bids, many times higher than the starting price, even higher than the market price.
Experts explain this phenomenon partly due to the FOMO (fear of missing out) psychology that appears in the market. Accordingly, people with this psychological syndrome often feel afraid of losing opportunities that people around them have... From there, they have the mentality that they must participate, buy, and own the object/opportunity or they will miss the opportunity.
This mentality appearing in the real estate market has caused many consequences, making real estate prices increase day by day, making it difficult for people to access housing.
According to Mr. Nguyen Van Dinh - Chairman of the Vietnam Association of Realtors (VARS), the extremely high winning bid prices at land auctions are unusual, occurring differently from normal, different from practice, but still partly reflect the investment needs of the people. And the FOMO mentality has appeared in the market.
The expert believes that when real estate prices maintain an upward trend for a long enough period of time, the FOMO mentality will arise, investors will expect prices to continue to increase, and then make risky decisions. This decision is also motivated by the perception that the adjustment of land prices in the coming time in localities will indirectly push up land prices.
The consequence of these situations is that real estate prices, which are 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.
As a result, many investors have their capital tied up, creating abandoned land, negatively affecting the recovery process, developing in a safe, healthy and sustainable direction of the real estate market, the socio-economic development of the locality in particular, and the whole country in general when the cash flow is stagnant in land, not going into other economic activities.
VARS experts also said that there are many doubts about speculation and price inflation. However, it is still very difficult to identify and handle speculative and price inflation behavior. Because in a market economy, the right to determine the selling price belongs to the property owner, the parties participating in the transaction follow the principle of willing buyer, willing seller. They can completely cancel the deposit without proof. And it is inevitable that they raise prices when any goods are scarce on the market.
Sharing the same opinion, economic expert Dinh The Hien analyzed: “Recently, there has been a lot of information that the real estate market is lacking in supply, along with the increase in land prices, making many people want to buy but cannot buy... This information has created a feverish atmosphere, making many people believe that land prices will only increase and increase. It is this atmosphere that causes the FOMO mentality to appear, there are people who do not want to buy yet, and are observing the market, they will feel that if they do not buy in time, land prices will increase again and they jump in.
So, we have to calmly look at whether it is really like that? Is the supply really that scarce, and are land prices really increasing? While the real estate market is currently quite quiet, banks are still having a hard time handling mortgaged properties for sale…”.
Experts also said that the State needs to soon have more mechanisms to control speculative activities, thereby reducing housing prices and solving people's housing needs.
