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Why is real estate market in fever?
Unexpected price hikes in the real estate market have escalated beyond expectations with investors returning in droves, particularly in Hanoi and HCM City.
Sharp increases in land prices
Over the past two months, land and house prices in inner and suburban Hanoi have sharply increased by 15-30 percent. Land prices for construction of villas or adjacent buildings in Duong Noi and Ha Dong urban areas have soared by VND 2-3 million/m2 while the prices of land for some projects along highways have also increased at the same time ranging between VND 21-51 million/m2.
Land prices on Hoang Quoc Viet street have gone up from VND15 million/ m2 to VND 20 million/m2.
However, the prices of some apartments have not increased as much as the prices of cheap land as investors tend to make a quick profit. However, due to limited supplies, the prices of apartments, especially near the city centre, have experienced a considerable increase in recent times because of the better infrastructure and living environment.
Apartment prices in Van Quan urban area have rosen from VND16-17 million/m2 to VND 17.5-19 million/m2 and more.
Land and house prices in HCM City have jumped by 20-30 percent. Land prices in An Phu and An Khanh areas, district 2 have increased from VND28 million/m2 in April to more than VND30 million. Land prices at the Thanh My Loi project site have also soared by nearly VND2 million/m2 to reach VND17-18 million/m2. Meanwhile, land and house prices in Nam Sai Gon area, district 7 have increased by 7-8 percent on average compared to the same period late last month.
Worrying about speculation
Many investors realise the economy is showing signs of recovery and investment needs to be put into the real estate market as investors will wait for increasing prices to make a better profit. Virtual waves in the real estate market created by speculators have attracted many investors to where they are hoping for a good return on their investments.
The real estate market is showing signs of recovery. However, it still needs to regulate itself, says Pham Sy Liem, deputy chairman of the Vietnamese Construction Association. Each city should have a real estate transaction centre set up by the State, not by banks. All services can be held there, including intermediaries, consultancies, notarising and supplying market information. Such a centre could examine the status of mediators and assessors to make the market develop in a healthy manner.
More time is needed to make sure the market will be heading in the right direction. The demand for real estate hardly changes and transactions are still reserved. The prices are expected to change here and there where some important infrastructure projects are underway. To stabilise the market, it’s important to make public all the necessary information so that land and house prices won’t be pushed too high by fevered speculation.
VietNamNet, VOV
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