Land prices in Ho Chi Minh City (HCMC) are rising sharply, and experts warn this can have negative consequences on public works and housing supply.
Cho Lon Real Estate JSC chairman Tran Van Chau said enterprises were worried that the abnormally high prices would affect their land acquisition for projects.
If land prices continued to rise, it would limit housing supply in the coming years, stymieing the southern Vietnamese city’s goals such as controlling home prices and developing social housing and affordable housing for migrant workers, he warned.
“Our company hopes that the city government will stabilise market prices such as by quickly issuing land-use right certificates for outstanding projects and increasing the supply of products in the market to stabilise prices.”
HCMC Real Estate Association (HoREA) chairman Le Hoang Chau said there was inflationary pressure now.
“Real estate is considered a safe haven by wealthy people amid high inflation. This will lead to higher real estate prices and fewer opportunities for low- and medium-income earners to own accommodation.”
Also, real estate supply and prices, especially in the southern market, could be affected by the recent land auction in the Thu Thiem New Urban Area where four land plots were sold at sky-high prices.
Ngoi Sao Viet Real Estate won the land plot for 2.45 trillion dong ($1.1 billion), or 8.3 times the reserve price.
Chau said that land prices in HCMC, especially the central area, had been pushed to new highs, which made it difficult for developers to build housing.
Saying the various segments in the market were inter-connected, he said: “When a segment is affected, the other segments will also be affected.
“I believe that real estate prices in HCMC will go up after the Thu Thiem land auction.”
Tran Anh Real Estate Co director-general Tran Duc Vinh said the high purchase price at the Thu Thiem land auction could lead to a situation where rich people buy land but not use it, making it difficult for people who need land for living, especially low-income people.
Rising land prices were also likely to affect credit markets since real estate prices are the basis for banks to decide loan limits, and price bubbles could create risks for the banking system, he added.
Khai Hung Group director-general Ha Ngoc Phi Hai said the auction had created a price bubble, and is likely to cause land prices across the city to rise rapidly.
Nguyen Hoang, director of DKRA Vietnam’s R&D division, said there would be many difficulties imminent in 2022, including a supply shortage caused by legal problems and high property prices.
Vietnam Real Estate Brokers Association vice-chairman and secretary-general Nguyen Van Dinh said the short supply would continue to plague the real estate market, and increase prices further.
He said the legal issues causing the problem would not be sorted out soon.
“I think there will still be problems in 2022.”
VIET NAM NEWS/ASIA NEWS NETWORK