Auction Land Market Cools Down After Over a Year of Frenetic Boom

Following the frenzied land auctions in Hanoi’s outskirts in 2024, the market’s allure has cooled, leaving many investors holding auctioned land eager to offload their assets, even at a loss.

In stark contrast to the bustling activity of 2024, land auctions in Hanoi’s periphery have stagnated since the year’s inception. Prices have noticeably declined in numerous areas.

For instance, 34 plots in the former Thach That district, auctioned mid-year, fetched a peak price of over 56 million VND/m², a 3.3-fold decrease from the December 2024 auction, where the highest bid exceeded 185 million VND/m².

Similarly, 9 plots in the former Phuc Tho district were sold at a maximum of 47 million VND/m², nearly 40% less than the previous year’s September auction. This session saw over 100 participants, a third fewer than the preceding one.

Mr. Nguyen Tien Thuat, a real estate agent in Hoai Duc commune, is marketing two plots for previous owners, priced only slightly above the auction price by 5-10 million VND/m², yet they’ve attracted no interest for months.

His company currently holds several auctioned plots in the former districts of Hoai Duc, Thanh Oai, and Quoc Oai, consigned by investors since early 2025. Transactions are scarce, with only 5 plots sold at the original investment price.

According to Mr. Thuat, investors typically add a premium of 200-300 million VND per 90-110m² plot, but buyers negotiate downward. After several adjustments, investors settle for their initial purchase price. This urgency to sell stems from impending bank repayments, forcing them to cut losses to preserve capital.

Mr. Thuat also mentions 4 plots in Hoai Duc, auctioned at around 85 million VND/m², now being sold at cost, with buyers responsible for taxes and fees. However, prospective buyers find them overpriced, seeking reductions of 200-300 million VND per plot.

“Last year, when the auction market heated up, many investors bought to profit, but the market shifted, slowing liquidity. These investors must sell to repay bank loans,” Mr. Thuat explains.

Mr. Tran Ngoc Anh, another Hanoi-based agent, reports that investors holding plots from August-September 2024 are lowering prices to sell.

A 61m² plot in the former Thanh Oai district, auctioned at 70 million VND/m² (4.25 billion VND), is now offered at a loss for 4 billion VND.

Another plot in the former Hoai Duc district, initially 85 million VND/m², has dropped to 80 million VND/m².

Mr. Ngoc Anh notes that while many auctioned areas have decent infrastructure, they lack future expansion plans, limiting price growth potential.

Speculators, buying on market momentum without assessing land potential, are now “holding the bag” as the market slows, forcing them to sell at a loss.

In reality, surrounding areas offer prices of 50-60 million VND/m², with some developed properties at 100-110 million VND/m², compared to auctioned plots at 80-120 million VND/m². Investors holding these plots have essentially paid prices anticipated for three years later.

A leader from an auction company observes a significant market cooldown. Previously, an auction might attract 1,000 applications, but now only a few hundred. The average has dropped from 40-50 applicants per plot to 10-20, with prices closer to reality and no more forfeitures.

Tightening Auction Land Controls

Experts attribute the auction market’s cooling to previously inflated prices, which, when far exceeding real value, hinder liquidity. Winners struggle to resell, especially with high bank interest rates and capital challenges in the real estate market.

Buyers have also become more cautious after rapid price hikes, no longer willing to overpay and then struggle to resell for a profit. Recognizing current prices as unrealistic, they now hesitate, fearing forfeiture if they can’t sell within a month.

Additionally, Hanoi’s outskirts like Hoai Duc, Thanh Oai, and Phuc Tho have uneven infrastructure development. While initially appealing, the high land prices don’t match market purchasing power, leading to prolonged holding periods and reduced auction land appeal.

Auctioned land, requiring full payment within a short timeframe, leaves little profit margin for investors. Without development plans, it becomes a dormant asset.

Mr. Nguyen Tien Thuat cites stricter auction regulations as a cooling factor. Increased deposits and the amended Asset Auction Law, effective this year, impose penalties, including 5-year bans and criminal charges for violations. This has reduced speculative activity, with many trading offices closing.

Authorities are also cracking down on speculation and manipulation, with new rules raising starting prices, increasing deposits, and penalizing forfeitures, which are now taking effect.

Mr. Pham Duc Toan, CEO of EZ Property, agrees that inflated prices led to liquidity issues. Winners face resale difficulties, exacerbated by high bank interest rates and capital constraints.

“Poor liquidity is directly cooling the auction land market,” Mr. Toan states.

He also notes buyers’ increased caution after price surges. “Some investors no longer overpay, realizing current prices are unrealistic and risking forfeiture if unsold within a month,” he adds.

Mr. Toan concludes that uneven infrastructure in Hanoi’s outskirts limits long-term appeal. High prices, mismatched with market demand, result in prolonged holding, diminishing auction land attractiveness.