Curbing Abnormal Price Hikes
Dong Nai People’s Committee has issued guidelines to enhance the management and control of volatile real estate prices. The Department of Construction is tasked with coordinating relevant units to review the business operations of real estate enterprises, investors, exchanges, and brokers. Any legal violations will be handled accordingly.
Dong Nai will closely monitor real estate resales and multiple handovers.
Dong Nai will particularly focus on tightly managing the construction of housing in subdivided lot projects to prevent land speculation, frequent resales, and price manipulation that distort market information. They will also disclose real estate market information to increase transparency and curb fraudulent activities.
The Department of Construction will collaborate with the Provincial Police, the Department of Natural Resources and Environment, and the Department of Finance to review land auction procedures, ensuring compliance with the law and transparency. Any violations in the auction process will be promptly detected and strictly handled to prevent land auction manipulation for personal gain and market disruption.
The People’s Committees of the districts and the city are instructed to inspect, understand the situation, and identify the causes of price fluctuations for each type of real estate. They will also closely monitor frequent resales, especially in project areas and apartment complexes with abnormal price hikes.
In Binh Thuan province, to prevent speculation and price manipulation as the real estate market recovers, the Department of Construction has published a list of 33 real estate projects that do not meet the conditions for transactions. These include 17 residential and urban area projects and 16 tourism and resort projects, none of which are eligible for real estate business transactions as per regulations. Most of these projects are located in prime areas of Phan Thiet city and adjacent districts and towns.
Previously, these 33 projects were halted by Binh Thuan authorities due to developers and distributors offering real estate for sale through reservation and position registration methods to collect money from buyers. These practices are not stipulated in the Housing Law, the Law on Real Estate Business, and related legal documents.
Controlling Speculators
Speaking to Tien Phong, Mr. Le Hoang Chau, Chairman of HoREA, stated that the newly issued land price framework by the HCMC People’s Committee is more aligned with the market. Land prices in the districts have increased significantly, ranging from 2.36 to 38.8 times the previous rates. Hoc Mon district leads with a 38.8-fold increase, followed by Thu Duc city with a 28.97-fold rise.
Despite the substantial increases, the highest land price for residential land on Dong Khoi, Le Loi, and Nguyen Hue streets (District 1) has been adjusted downward by 15.2% compared to the previous draft. The current highest price is VND 687 million/m2, lower than the previously announced draft of VND 810 million/m2.
Ho Chi Minh City needs to effectively control the activities of speculators, land brokers, and a few enterprises that disrupt the market.
Mr. Chau opined that the new land price framework would directly affect individuals and households when applying for land-use certificates and legalizing land use rights. However, it might not immediately impact the real estate market, as current projects are mainly priced using the surplus method. But when enterprises acquire land for project development, people may want to sell at higher prices, creating upward pressure on housing prices.
“For now, the adjusted land price framework will not immediately affect the real estate market because the pricing of real estate and commercial housing projects is mainly based on the surplus method. However, it will have an impact in the ‘second phase’ when real estate enterprises acquire land for real estate, urban, commercial housing, and social housing projects, as people may want to sell at higher prices than before, leading to ‘push-up’ pressure on housing prices,” said Mr. Chau.
The HoREA Chairman also warned that authorities need to effectively control the activities of speculators, land brokers, and a few enterprises that may take advantage of this situation to manipulate prices and disrupt the market. Additionally, there is a need to strengthen legal propaganda to ensure that people, investors, and enterprises understand the new regulations.
Mr. Vo Hong Thang, Director of Consulting and Project Development Services at DKRA Group, stated that after the new land price framework was issued, the price level of residential land and land with residential land use certificates had increased dramatically. In the future, this segment will become scarce, especially for residential land with certificates and residential land in existing urban areas, where consumption rates have increased by more than 30%. Regarding projects, he believes that in the short term, projects with available land and only land-use fees will not be significantly affected. However, in the long term, when investors acquire new land, the increased cost of land compensation and clearance will be factored into the selling price, leading to higher product prices in the market.
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