Land prices shoot up in HCM City, cause worry

Land prices in Ho Chi Minh City are rising sharply, and experts warn this can have negative consequences on public works and housing supply.

Tran Van Chau, Chairman of Cho Lon Real Estate Joint Stock Company, said enterprises were worried that the abnormally high prices would affect their land acquisition for projects.

If land price continued to rise, it would limit  housing supply in the coming years, stymieing the 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.”

Le Hoang Chau, Chairman of the HCM City Real Estate Association (HOREA), 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 VND ( 1.1billion USD), or 8.3 times the reserve price.

Chau said that land prices in HCM City, 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 HCM City will go up after the Thu Thiem land auction.”

Tran Duc Vinh, General Director of Tran Anh Real Estate Company, 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 limit s, and price bubbles could create risks for the banking system, he added.

Ha Ngoc Phi Hai, General Director of Khai Hung Group, 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.

Nguyen Van Dinh, Vice Chairman and General Secretary of the Vietnam Real Estate Brokers Association, 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.”/.