Worry of Skyrocketing Land Price in Q1/2022
Why land prices in many localities continue to increase despite strong fluctuations in 2021?
Batdongsan’s residential land market report said in the first quarter, many provinces in all three regions of the North – Central – South recorded an increase in the asking price of land plots on online markets, from 25-74%*.
*This data does not mention agricultural land, land for perennial crops, and forestry land, although over time, investors and speculators still bought mixed land and changed the use purpose to residential later.
How Much The Increase Is?
In the past 3 months, on online real estate markets in Hanoi, residential land prices in Chuong My district have increased by 74% compared to 2021, which is the highest increase in the North region and the highest in the whole country. Other districts in Hanoi such as Dong Anh, Gia Lam and Quoc Oai recorded a 20-26% increase in the price of land plots.
The wave of land price increases spread to many northern provinces, of which residential land prices in Bac Giang increased by 35%, followed by Hai Phong by 29%. Other provinces such as Bac Ninh and Quang Ninh respectively recorded a 16-20% increase in land prices.
In the Central region, residential land in Binh Thuan increased by 13%, Khanh Hoa by 26% and Thanh Hoa by 35%. Besides the fluctuating land price, Lam Dong, Khanh Hoa, and Da Nang provinces have increased the number of online users searching for land plots by 41%, 35% and 32%, respectively.
Meanwhile, in the South, in Ho Chi Minh City, residential land prices in Cu Chi (HCMC) increased by 25%, Binh Chanh increased by 10%. In the Southeast region, there was also an increase in land prices on online exchanges in the first months of the year. Land plots in Dong Nai, Tay Ninh and Long An are only priced at 7-13%, but land prices in Binh Phuoc and Binh Duong escalate by 23-27%.
Land plots in the South area
The Main Reasons Why Land Prices Have Strong Fluctuations In The First Quarter Of 2022:
- In the context that inflation is becoming a concern of investors, due to concerns about price slippage and inflation when money is pumped into the market through economic stimulus packages and public investment disbursement, accumulated demand assets attached to land as a safe haven channel increase. When the demand for land increases, the selling price therefore also skyrockets.
- According to Mr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, it is with the help of unprofessional brokers, pushing land into a speculative commodity. The price fever does not serve the local economic development, on the contrary, leaves many unpredictable consequences, causing the real estate market to develop unhealthy.
- One of the reasons why investors choose land, gold, etc… as an investment channel and shelter assets is because the pandemic of the past two years has disrupted domestic and global supply chains, affecting the economy and production.
- In addition, some places have not strictly implemented auctions. There is a phenomenon of information disclosure and collusion between the auction organization and the participants.
What Are The Consequences Of This Land Price Increase?
At the Government press conference on the afternoon of April 4, Mr. Le Cong Thanh, Deputy Minister of Natural Resources and Environment, said the phenomenon of land prices increasing in many localities has lost the advantage of attracting investment capital, breaking the regulation of land price planning, land use planning and macroeconomic effects.
Therefore, it is necessary to amend and supplement the Law on Property Auction, which provides more specific provisions on the auction of land use rights assets.
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