“Cooling-off” period sees land auction fever wane
Contrary to the dull scene last year, the land auction in Thanh Cao commune, Thanh Oai district, in early August ignited the heat of land in the outskirts of Hanoi, attracting more than 4,000 applications from about 1,600 participants.
Notably, from a starting price of VND8.6-12.5 million per square meter, the highest winning bid exceeded VND100 million per square meter, while the area has not seen strong infrastructure development.
It didn’t stop there. At the auction of 19 land lots in Lonh Khuc, Tien Yen commune, Hoai Duc district (August 19), the highest winning bid peaked at VND133.3 million per square meter. Compared to the starting price of VND7.3 million, this lot was sold for more than 18 times the price.
Immediately after the auctions in Thanh Oai and Hoai Duc, a leader of the Hanoi Department of Natural Resources and Environment commented to VietNamNet that there was a phenomenon of land lots in some auctions being bid up many times over. The winning bid prices kept increasing, with each auction higher than the previous one, which could be called “abnormal”.
After this “abnormality”, many auctions in the outskirts of Hanoi continued to record winning prices of over VND50 million per square meter.
For example, three recent land auctions in Phuc Tho district continuously set new records in the area, with the highest winning bid in the latter auction higher than the former, ranging from VND60 million to VND69.8 million and VND75 million per square meter. However, compared to the land auctions in many districts on the outskirts of Hanoi recently, it can be seen that these auctions attracted fewer participants.
Chart: Hong Khanh
Specifically, the auction on August 29 attracted more than 650 applications for 39 land lots, with 350 investors participating.
On September 10, the auction of 47 land lots received a total of 416 applications, attracting 180 registered customers.
The auction of 13 land lots on September 16 attracted about 140 valid applications from 75 participants.
More than a month after the auction of 68 land lots in Thanh Cao commune, Thanh Oai district (August 10) stirred up the market, the authorities concluded that about 80% of the winning bidders had forfeited their deposits. Notably, all the land lots with winning prices from VND80 million to VND100.5 million per square meter were not paid for.
On September 18, the auction of 32 land lots in Bach Da village, Kim Hoa commune, Me Linh district, broke the chain of winning prices of over VND50 million per square meter that had been maintained for more than a month. At this auction, the highest winning bid was VND48.9 million per square meter, less than double the starting price.
Mr. Pham Duc Toan, General Director of EZ Property, said that the result of 80% of investors forfeiting their deposits in the Thanh Oai auction was “expected” and “not surprising”. This shows that most of the winners are investors and speculators, without real housing needs.
However, after the authorities inspected the land auctions, there were no dramatic increases in winning prices at land auctions in the outskirts of Hanoi. The starting prices at these auctions were also relatively high, with deposits ranging from over VND400 million to more than VND1 billion. Looking at the number of applications and participants, it can be seen that this is reasonable, as the high deposit amount will limit speculation.
Factors influencing land auctions. Illustration: Hong Khanh |
“When evaluating an auction, it is necessary to consider many factors such as the area’s potential, buyer interest, and price fluctuations. Investors need to observe the market to make accurate assessments and avoid being caught up in the vortex of an artificial market created by speculators,” said Toan.
Pushing up auction prices shatters many people’s dream of homeownership
Economist Assoc. Prof. Dr. Dinh Trong Thinh said that pushing up land auction prices and then forfeiting deposits will have many negative consequences for the real estate market and affect many subjects. Creating artificial fever leads to higher housing prices and market disruption.
Most people with real housing needs will find it difficult to realize their dream of homeownership, while profits only go to a small group of investors. People need to be cautious and careful when deciding to buy land in these areas.
One of the immediate damages is the decline in budget revenue. In Thanh Oai, the total revenue from the August 10 auction reached more than VND80 billion, only 20% of the expected revenue at the end of the auction.
According to Toan, localities still earn money from selling application forms and advance payments, but in the long run, a large number of forfeited deposits will waste resources when the locality has to organize the auction again, affecting socio-economic development plans.
Many localities in Hanoi temporarily suspend some land auctions. Illustration: Hong Khanh |
The enterprise leader also said that land auction prices being pushed up could hinder land price appraisal, compensation, and site clearance for surrounding projects.
To stabilize land auction activities and make them more practical, according to Assoc. Prof. Dr. Dinh Trong Thinh, localities organizing land auctions must determine the starting price based on the market price. From there, the deposit amount will be raised.
Dr. Tran Xuan Luong, Vice Director of the Institute for Research and Real Estate Market Evaluation, proposed that it is necessary to have strict management measures, policy reforms, and synchronous planning to create an abundant supply of housing in general.
At the same time, it is necessary to soon issue tax policies such as committing to the construction time on the land, from 1-2 years after winning the auction, before being allowed to transfer the land. If the land is transferred within this period, a very high tax rate will be applied, as practiced in many countries around the world, to stabilize the market and prevent speculation and money laundering.
Hong Khanh
The Surprising Halt: Hanoi’s Dan Phuong District Cancels Auction of 26 Land Plots
The auction of 26 land lots in the Trũng Vỡ area of Tân Hội commune, Đan Phượng district, Hanoi, has been temporarily halted at the request of the District Land Development Centre.
The Capital’s Upcoming Suburban Land Auctions: Strategies to Prevent Price Inflation and Bid Withdrawal
In September, several districts in Hanoi’s outskirts will hold land auctions, and experts believe that measures are needed to control and prevent market disruption.
“Auction Bidding Results in Higher Prices Than Reserve Prices”
Through our investigations, it has been revealed that the winning bid prices are significantly higher than the reserve prices. This phenomenon can be attributed to the overall upward trend in the real estate market, which is currently on a path to recovery. The land-use rights auction took place at a unique juncture, between the phasing out of the 2013 Land Law and the introduction of the 2024 Land Law.
“Land Auction Far Exceeds Reality: A Tale of Unscrupulous Intent”
The high number of participants at the recent land auctions is not surprising, given the typical demand for investment opportunities among the public, especially when it comes to the scarce supply of “clean” land. However, the unusually high winning bids are a cause for concern and raise questions about the dynamics of these auctions.
