People are hungry for investment

The auction of 68 plots of land in Ngo Ba area, Thanh Than village, Thanh Cao commune (Thanh Oai, Hanoi) took place on the morning of August 10, causing a stir in public opinion. The plots of land auctioned ranged in area from 60m2 to 85m2 with starting prices from 8.6 million VND/m2 to 12.5 million VND/m2. At the end of the session, the corner plot with the highest winning price was nearly 100.5 million VND/m2, 8 times higher than the starting price. The regular plots had winning prices of 63-80 million VND/m2, 5 to 6.4 times higher than the starting price.

At the workshop "New dynamics, new opportunities, challenges from the 2024 Land Law and related laws" organized by Thuong Gia Magazine on the morning of August 15, Mr. Nguyen Van Dinh - Vice President of the Vietnam Real Estate Brokers Association - said that this phenomenon is a problem of the market.

According to him, the process of amending and making laws has been prolonged, leading to little fluctuation in the real estate market. In Hanoi, in the past 3-4 years, there have been almost no new official projects entering the market. There are also almost no land projects. Many land auctions in 2022-2023 were unsuccessful.

He said that the real estate supply is weak but the demand is very strong. Data from the Vietnam Real Estate Association shows that the demand among the people is very high, including housing and investment demand. They are waiting for projects with full legal status like the recent Thanh Oai land auction. That is the reason why there are several thousand people interested in several dozen plots of land, and about a thousand people bought documents to participate in the auction.

"When supply is low and demand is high, when there is a phenomenon of supply, people rush in. People are very hungry for investment, very hungry for goods," Mr. Dinh commented. He said that this phenomenon is normal, but the price is higher than the market level.

The price increase is calculated by participants, but there will be adjustments in supply and demand. Mr. Dinh said that in recent days, some people have rushed to cut losses. Therefore, market participants need knowledge and expertise.

Need to issue tax policy on abandoned real estate

At the conference, National Assembly delegate Phan Duc Hieu - Standing member of the National Assembly's Economic Committee - assessed that the three real estate laws have provisions that help the market become transparent, fair, and comprehensive. However, he said that the Land Law will not solve all the problems of the market.

"I will talk about this issue until I retire. The Land Law will not be able to completely resolve the issue of land use rights value," Mr. Hieu emphasized.

He said that the current Land Law takes a comprehensive approach, and land prices are determined according to market principles. However, if the mechanism only uses the Land Law, it is likely that land prices will only increase and not decrease.

Resolution 18 also states that the State, in addition to the Land Law, must have a tax policy to impose on the use of large amounts of land, slow use of land, and abandonment of land, called property tax on land. If the Government does not soon issue this tax policy, it will not be able to comprehensively handle the problems of the real estate market.

"I think that in our country, it is not necessary but urgent to immediately issue a tax policy for abandoned real estate," Mr. Hieu emphasized. Mr. Hieu said that it is impossible to use administrative mechanisms to force land prices to increase or decrease, but must synchronously use market mechanisms and new intervention methods.

If the Government does not soon restart the project on real estate tax to regulate the real estate market according to market tools, the Land Law cannot solve the above problem. Of course, the criteria for tax assessment must ensure fairness.

"I believe that when this tax is issued, it will immediately affect the real estate market. Just starting the draft, without even pressing the approval button, will already impact the market," Mr. Phan Duc Hieu affirmed.