Preventing brokers from pushing up land prices in the real estate market

Illustration.

Brokers pushing prices

The October report of batdongsan.com.vn showed that the market was like a long-compressed spring that is bouncing up strongly. Currently, the level of investors’ interest in the real estate market has recovered to the level of July 2021, which was the time before social distancing, and tends to increase strongly.

Surveys showed that the price of land plots and apartments increased in many areas in Hanoi. At the beginning of 2021, an apartment at TASCO building (Diplomatic Union urban area) cost about VND40-45 million/m2, now it has increased to VND50 million/m2.

Similarly, land in Hai Boi and Xuan Canh communes (Dong Anh), according to freelance brokers, a plot on the main axis was priced from VND70 million/m2 in March, now it has increased by 15-10%. In particular, land plots at a good location increased by 40%.

Not only that, but auction land also increased. In early November, Cau Giay district held an auction of 25 land lots in X4 area, Mai Dich ward (Cau Giay, Hanoi) with an area of 38.1 - 84.8 m2 with prices starting from VND104.7 - 182.3 million/m2. At the end of the auction, the winning price was 1-2 times higher than the starting price.

Regarding this issue, Nguyen Quoc Anh, Deputy General Director of Batdongsan.com.vn said that this was a strange phenomenon because the winning bid price is much higher than the market price. "It is a bit difficult to explain, maybe some brokers want to set up a new price level to create a small land fever around that area," said Anh.

According to Nguyen Anh Tuan, a freelance broker in Hoai Duc, recently, he sold a villa in North An Khanh, the owner offered VND25 billion, and if he sold VND26-27 billion, he would get that difference. Tuan said that homeowners often negotiated with brokers in that form, rather than deducting commissions for brokers, so house prices may be pushed higher.

Bring brokerage activities into the framework

At a discussion to remove difficulties for the real estate market, Deputy Minister of Construction Nguyen Van Sinh also acknowledged the fact that real estate prices continued to increase. Housing prices, especially in urban areas, were too high compared to people’s income. In particular, speculators and brokers took advantage of the unclear administrative planning and investment policies to build new urban areas, tourist areas, invest in airport construction to push up land prices in some areas to make a profit.

According to Sinh, the reason is that the operation of real estate trading floors has many shortcomings, making it difficult for State management of real estate transactions. In which, there is also the phenomenon of real estate trading floors colluding with each other to "create waves", causing a "virtual fever" to disturb the real estate market.

Meanwhile, many brokers are weak in expertise and business ethics, have limit ed legal knowledge and professionalism. This leads to irresponsibility, causing damage to customers. Many freelance brokers do not have a practicing certificate as prescribed.

To prevent this situation, Nguyen Van Dinh, Chairman of Vietnam Real Estate Brokers Association, said that the Ministry of Construction has proposed to amend the Law on Real Estate Business in 2014. Accordingly, real estate products must go through the real estate trading floor to ensure publicity and transparency, avoiding "virtual" projects; and ensure price stability, avoiding "pushing up prices". Then real estate products will be listed publicly and transparently.

According to Mr. Dinh, to conduct transactions through the floor, it is necessary to strictly regulate operating conditions, so as not to affect customers’ interests.

Besides, activities must be professional; all those practicing brokerage consulting for clients are required to have certificates. Because certificates will be assigned an identity and activity code, and these people are managed digitally.

"This is to require practitioners to operate seriously and with prestige, avoiding pushing prices and creating waves, which causes disturbances to the market," said Dinh.